Hosken Consolidated Investments (HCI) is bullish on SA’s gas prospects as it presses ahead with plans to establish an off-taker for gas and condensate in the country.
The JSE-listed empowerment group has put its faith and money in pursuing the development of the gas find in Block 11B/12B despite all its international partners, including French major TotalEnergies, abandoning the search for gas off Mossel Bay.
Writing to shareholders in the group’s most recent report, CEO Johnny Copelyn said the company was hopeful the production right will be granted in the first quarter of next year.
“Essentially, one of the most obvious possibilities is to use the gas as fuel for a gas-to-power plant at Mossel Bay. This would potentially provide the country with much-needed base electricity supply with less than half the emissions of the current coal-fired power stations,” Copelyn said.
“This is particularly important in a decade where the commitments of the country to reduce emissions oblige it to shutter older coal-fired power plants. We have negotiated access to a piece of land owned by the Garden Route District very close to the Gourikwa plant which we believe is suitable to house a gas-fired power plant,” he said.
“We are pursuing all the regulatory permissions that are required for this in anticipation of such an offtake. The difficulty ... is that it is unlikely to use all the gas available in a commercially sensible time frame.”
Copelyn also flagged currency risks as customers of the plant would pay in rand though the gas is priced in dollars.
“Alternatively, it may be possible to provide a floating liquefied natural gas (LNG) solution which would allow the gas to be converted to LNG and then sold in the same manner as the condensate. Africa Energy Corp (AEC) will continue to work on these issues pending the grant of the production right,” Copelyn said.
HCI holds stakes in AEC, a Canadian oil and gas company, though its Deepkloof unit and through its ownership of Impact Oil & Gas Ltd, which holds shares in AEC
“No matter how the future difficulties of the block are resolved, it remains an asset with enormous value to both its owners and to SA as a whole. It is still the only multi-trillion cubic feet gas find in the country,” he said. “Hundreds of millions of dollars have already been spent to prove the extent of the discovery and our view remains strongly that it can be profitably exploited and that it is a national asset which simply must be developed.”
TotalEnergies — the operator of Block 11B/12B, where it made two gas discoveries, Brulpadda and Luiperd — walked away from the multibillion-rand project last year. The reason given was that Brulpadda and Luiperd could not be “converted into commercial development due to the difficulties encountered in developing and upgrading these gas discoveries on the SA market”.
TotalEnergies’ decision to withdraw from the “game-changing” discoveries of gas condensate fields off the coast of Mossel Bay leaves AEC as the sole owner of the exploration rights in the projects.
Copelyn said at the time of TotalEnergies’ withdrawal that HCI held only an indirect minority stake in AEC. HCI, valued at R11bn on the JSE, has since entered into several agreements that will result in it having a direct 48% shareholding in AEC.
“AEC has taken transfer of the relevant documentation on the block from TotalEnergies, which has withdrawn as operator. It has submitted an application for the environmental impact assessment relating to the production right application,” he said.
“The department of minerals & energy has recently signed off on its scoping report, which has allowed AEC to proceed to the next phase of this application. We hope that the actual production right will be granted in the first quarter of 2026.”
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