South Africa’s iGas and Mozambique’s CMG Acquire ROMPCO Pipeline Interest

As South Africa enters stage six load shedding, integrated energy and chemical company, Sasol, has announced that South African gas development company, iGas and Mozambique’s Companhia Mocambiçana de Gasoduto (CMG) have exercised their pre-emptive rights to acquire a combined 30% equity interest in the Republic of Mozambique Pipeline Company (ROMPCO) pipeline. With Sasol selling its interest in May 2021, in line with the company’s divestment strategy, the acquisition marks a new era of regional cooperation on the back of the intra-African gas trade.

Sold for an initial R4.1 billion with an additional deferred payment of R1 billion – pending specific milestones are achieved by June 30, 2024 –, the shares bring iGas and CMG’s total equity shares to 40% each, up from 25%, with Sasol subsidiary, SSA holding the remaining 20%. Sasol will remain the operator of the pipeline with supply to South Africa remaining unimpeded. Linking gas-rich Mozambique with Sasol’s Secunda operations in South Africa, the 865km pipeline has been instrumental in supplying South Africa’s economy with energy, and the acquisition is expected to herald a new era of trade between the southern African nations.

The acquisition comes at a critical time, both for South Africa and Mozambique. This week, South Africa introduced stage six load shedding, citing coal plant disruptions and maintenance delays, plunging the country into six hours of darkness per day as the energy crisis worsens. Accelerating the diversification of its energy mix, natural gas is expected to play an increasingly important role in the country, with the pipeline itself serving as a key asset to improving energy security. South Africa has placed natural gas as a priority in 2022 and beyond, recognizing the role this clean energy resource will have, spurring industrialization and meeting both domestic and regional demand. With the acquisition, gas supply will not only be maintained but possibly increased as Mozambique increases its capacity and South African demand grows.

Meanwhile, for Mozambique, as large-scale gas projects begin to come online including the Coral-Sul floating liquefied natural gas (LNG) facility – which received its first gas in June 2022 –, a new era of gas market growth is in sight. With over 100 trillion cubic feet (tcf) of gas, Mozambique continues to make significant progress toward becoming a competitive gas exporter. ROMPCO, which has been exporting gas from Mozambique’s Pande and Temane fields since 2004, has not only paved the way for cross-border gas trade but has emphasized the role intra-African trade will have in strengthening energy security across the continent. Going forward, as other sizeable projects including the TotalEnergies-led 12.8 million tons per annum Mozambique LNG project, the country is set to witness unprecedented socioeconomic growth on the back of revenue generated from gas.

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Written by Mercy ANURIKA

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