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While gas discoveries in northern Mozambique are hogging the headlines, Sasol is quietly expanding its activities further south. On the PSA licence adjacent to the current producing Pande/Temane PPA area, Sasol declared commerciality on the Inhassoro G6 and G10 oil, and Temane G8 and Temane East gas reservoirs early this year. Sasol Petroleum International managing director Ebbie Haan told Global Pacific & Partners’ Africa Upstream conference on 28 November that development planning was currently underway, and Sasol planned a final investment decision by February 2015 on a project to double gas production from the licence.

Sasol Petroleum International has signed an exploration right permit to explore for hydrocarbons in the Durban and Zululand basins offshore KwaZulu-Natal province on South Africa’s east coast. The Petroleum Agency SA granted the permit for an initial period of three years.The Durban and Zululand basins are of interest because they sit at the southern end of the Mozambique Channel. Sasol has exploration and production acreage further north, onshore and offshore in Mozambique. “This is Sasol’s first operated Exploration Right licence in South Africa for at least a decade,” said Sasol Petroleum International managing director Ebbie Haan. Sasol was granted a technical cooperation permit in 2011 for an area covering 83,000km2.

Ncondezi Energy has launched the engineering, procurement and construction contract proposals process for its 300MW integrated thermal coal mine and power plant project in northern Mozambique. Earlier this year the company received 16 indicative bids for the project and drew up a short list of seven. The pre-qualified bidders are expected to submit a binding, fixed price lump sum turnkey contract for the engineering, procurement, construction and commissioning of two 150MW power plant boiler units using circulating fluidised bed technology in Q1 2014.

Former rebels of the Resistência Nacional Moçambicana (Renamo) have dealt a blow to Mozambique’s efforts to position itself as a major investment success story and future gas exporter, abandoning their 1992 peace deal with the ruling Frente de Libertação Moçambicana (Frelimo) with a series of attacks on government troops. Few commentators expect a return to all-out civil conflict but investors are jumpy, not least because Renamo’s rejection of peace coincides with a spate of kidnappings –15 in October alone –with some in the capital, Maputo. In early November, British-Australian mining giant Rio Tinto, which has extensive coal operations in north-western Tete Province, withdrew expatriate employees’ families from the country.

Three UK government ministries have launched the High Level Prosperity Partnerships, aiming to strengthen economic cooperation with Angola, Côte d’Ivoire, Ghana, Mozambique and Tanzania. The Foreign & Commonwealth Office, UK Trade & Investment and the Department for International Development (DfID) will work together to identify opportunities to increase trade and investment, to harness what ministers describe as the UK’s “competitive advantage” amid growing competition from new investors in Africa as well as the continent’s traditional partners. The initiative follows a summit of the Group of Eight wealthiest countries in Northern Ireland in June, hosted by UK prime minister David Cameron, which gave its backing to the growing global transparency agenda with a ten-point plan covering a range of issues including tax evasion, payment transparency and ending barriers to free trade

Italy’s Eni has made a tenth discovery with the Agulha well in its prolific Area 4, opening up a new exploration play in the southern part of the block. Preliminary estimates suggest the Agulha structure could contain 5-7tcf of gas. 
Agulha was drilled to a total depth of 6,203 metres in 2,492 metres of water, testing the hydrocarbon potential of geological sequences that are older than those drilled in the Mamba complex.

Mozambique energy minister Salvador Namburete on 30 August inaugurated the expansion of Aggreko’s gas-fired power plant at Gigawatt Park in Ressano Garcia. The expansion adds 122MW of capacity, bringing the total generation output to 232MW. The plant began operating in July 2012, supplying power into the Southern African Power Pool, with the first offtakers from the project being Electricidade de Moçambique (EdM) and Eskom.

APR Energy has announced new contracts to provide 40MW of power to Mozambique and 32MW to Senegal. The Mozambique award is a multi-year contract for a fast-track power plant comprising gas power modules. The plant will run solely on natural gas and will be APR Energy’s second project in the country. APR’s 32MW contract for diesel power modules in Senegal will supplement the 66MW of power the company is already providing. The new capacity will be installed at APR’s Kounoune site just outside Dakar.

In a rare failure for exploration offshore Mozambique, Statoil’s Buzio-1 exploration well in Area 2 has failed to find hydrocarbons and will be plugged and abandoned. The Buzio-1 well is the second deep-water exploration well drilled in Area 2 and targeted stratigraphic traps in channel systems of Tertiary and Upper Cretaceous ages. The Discoverer Americas drillship drilled Buzio-1 to a final depth of 3,333 metres in water depths of 1,534 metres.

A shift is under way in the global economy that will test claims that sub-Saharan Africa (SSA) has emerged from years of structural adjustment with more robust domestic markets and greater resilience to commodity price volatility and capital outflows. The World Bank has suggested the region could be approaching the conditions for economic lift-off comparable to China three decades ago. In many countries, the bank argues, sound fundamentals mean growth is more sustainable than in previous periods, when ‘hot money’ came into frontier economies only to leave again with damaging consequences.

Eni and China National Petroleum Corporation (CNPC) on 25 July concluded Eni’s sale to CNPC of 28.57% of Eni East Africa for $4.21bn. Through this deal, CNPC acquires a stake in Eni East Africa which equates to a 20% indirect participation in Area 4, while Eni remains the indirect owner of the 50% participation owned by Eni East Africa.

Statoil’s Cachalote-1 exploration well in offshore Area 2 has failed to hit oil and instead encountered non-commercial gas. The well was the first deep-water exploration well to be drilled on the block and discovered a gas-bearing reservoir in an Upper Cretaceous deep-water channel system. Partner Tullow Oil said the well found 38 metres of good quality gas-bearing reservoir sandstones in an Upper Cretaceous objective on the outboard flank of the regionally important Ibo High. Tullow said the gas was unlikely to be commercial on a standalone basis.

India’s state-owned ONGC Videsh Ltd (OVL) and Oil India have signed an agreement worth $2.47bn with Videocon Industries to acquire its 10% stake in Anadarko’s Rovuma Basin Area 1. Under the agreement, signed in Singapore on 25 June, OVL and Oil India have formed a 60/40 joint venture through which they will contribute to the costs of field development and a liquefied natural gas (LNG) facility. The deal requires the approval of the Mozambican and Indian governments and is expected to reach financial close during Q4 2013. Videocon, a conglomerate controlled by Indian tycoon Venugopal Dhoot, paid $75m for the Rovuma stake in 2008, before giant gas finds caused its value to soar.

The African Development Bank (AfDB) has approved a supplemental loan of $33m to the government to fund the rehabilitation of the Massingir dam on the Olifants River in Gaza Province. Construction began in the 1970s but was halted during Mozambique’s 16-year civil war. The project was finally completed in 2007 but, after only a year, the dam’s bottom outlets ruptured, flooding 90,000ha of farmland.

Ncondezi Coal announced on 25 April that it has signed a power framework agreement with the Mozambican government for the first 600MW phase of its coal project. The framework is a legal prerequisite for power purchase agreement, coal supply and transmission negotiations to begin and will govern the relationship between the company and the government during the development phase.