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iGas, CMG acquire Republic of Mozambique Pipeline Co. pipeline

Published by
World Pipelines,


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 Mocambic¸ana de Gasoduto (CMG) have exercised their pre-emptive rights to acquire a combined 30% equity interest in the Republic of Mozambique Pipeline Co. (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 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 30 June 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 865 km pipeline has been instrumental towards 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, recognising the role this clean energy resource will have, spurring industrialisation 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 LNG facility – which received first gas in June 2022 –, a new era of gas market growth is in sight. With over 100 trillion ft3 of gas, Mozambique continues to make significant progress towards 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 emphasised the role intra-African trade will have for strengthening energy security across the continent. Going forward, as other sizeable projects including the TotalEnergies-led 12.8 million tpy Mozambique LNG project, the country is set to witness unprecedented socioeconomic growth on the back of revenue generated from gas.

A strong advocate for increasing intra-African gas trade, the African Energy Chamber (AEC) commends both Mozambique and South Africa for the acquisition, recognising the significance this momentous deal will have for generating revenue in Mozambique through the export of gas while ensuring a consistent supply to South Africa as the country’s energy crisis becomes imminent.

“Africa needs gas, and the Chamber will continue to drive this narrative. In 2022, the energy crisis has only become clearer. Countries including South Africa are at risk of delayed socioeconomic growth due to inconsistent power supply, supply which can be improved through gas. With projects in Mozambique coming online and new supply brought on the market, increasing intra-African gas trade will be key for unlocking a new era of industrialisation, energy access and socioeconomic growth. During the continent’s premier energy event, African Energy Week (AEW) 2022, we will discuss gas, intra-African gas trade and diversification, providing the best platform for deals such as the ROMPCO acquisition to be signed,” states NJ Ayuk, Executive Chairman of the AEC.

During AEW 2022 – which takes place from 18 - 21 October 2022, in Cape Town – discussions will centre around the role that improving intra-African gas trade will have in Africa. With over 620 trillion ft3 of reserves across the continent, gas presents an ideal solution to making energy poverty history by 2030.

Read the article online at: https://www.worldpipelines.com/business-news/01072022/igas-cmg-acquire-republic-of-mozambique-pipeline-co-pipeline/

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This article has been tagged under the following:

Africa pipeline news Acquisitions and mergers