Australian gas explorer Kinetiko Energy has commenced discussions with petrochemical giant Sasol regarding a potential supply agreement. Kinetiko Energy’s recent discovery of shallow sandstone gas in Block 272 of the Mpumalanga province has positioned it as a potential gas supplier to Sasol, which is South Africa’s largest gas consumer and distributor. The gas deposit, situated in close proximity to Sasol’s Secunda petrochemical complex, holds the potential to address Sasol’s pressing need for alternative gas sources.
Currently, Sasol relies heavily on gas supplied through the Rompco pipeline from Mozambique to South Africa. However, with the projected depletion of the Pande and Temane onshore fields in Mozambique, Sasol faces an impending shortage of its primary gas supply within the coming years.
Kinetiko Energy’s Chief Executive, Nick de Blocq, revealed that the company’s discussions with Sasol are in their early stages and lack detailed specifics. He highlighted Sasol’s geographical proximity to the gas deposit, making it a natural choice for potential gas offtake from the northern block.
Acknowledging the preliminary nature of the discussions, a Sasol spokesperson confirmed that the company’s CEO, Fleetwood Grobler, has engaged in talks with Kinetiko Energy. However, given the nascent stage of these conversations, no detailed aspects are currently under consideration.
The potential collaboration between Kinetiko Energy and Sasol comes at a time when Sasol is grappling with challenges that could impact the viability of its Secunda complex after 2030. Recent developments, including a non-cash impairment of 35 billion rand ($1.87 billion), have prompted Sasol to trim its final dividend by almost a third.
Beyond the Block 272 gas deposit, Kinetiko Energy’s exploration efforts have also yielded positive results in Blocks 270 and 271 further south. The company aims to establish South Africa’s largest onshore liquefied natural gas (LNG) project, with Block 271 serving as the focal point. Initial plans encompass the production of gas equivalent to 50 megawatts of power, a capacity that could progressively expand to 500 and eventually 1,500 MW equivalent.
Under the proposed framework, the execution of an initial 30-well field is envisioned, with each cluster of 10 wells facilitating the production of approximately 5,000 tonnes of LNG annually. Regulatory approvals are pending, and a timeline for project initiation remains contingent on these clearances.
To secure the necessary financing for its ambitious LNG project, Kinetiko Energy is considering a joint venture with South Africa’s Industrial Development Corporation. Furthermore, the company is exploring the possibility of a secondary listing in either London or Johannesburg as part of its financing strategy.
As both Kinetiko Energy and Sasol navigate these crucial negotiations, industry stakeholders eagerly anticipate the potential transformation of South Africa’s energy landscape and the establishment of a new paradigm in gas supply and utilisation.
