Zim mulls gas plants

Exploration of coalbed methane (CBM) natural gas reserves in Zimbabwe could soon become a reality, after highly-placed government sources told this paper that a global oil conglomerate was mulling prospects of recovering the resource and building gas-energy plants in the country. The venture, if successful, will not only see production of electricity at the proposed gas-energy plants; but will result in the production of synthetic fuels that will go a long way in alleviating the current fuel crisis that has threatened to cripple Zimbabwe's industries.

The source said the company was currently evaluating cost-effective methods of recovering the natural gas before committing themselves to the project. "I can confirm that there is a global energy giant weighing the project benefits, and that the company is currently evaluating what method of recovery it will use, how cost-effective that method will be, and also conduct an environmental assessment impact survey," said a senior government official who refused to be named. The official added that serious exploratory work would only begin once Zimbabwe's new parliament puts in place legislation to facilitate the exploitation, transportation and utilisation of gaseous hydrocarbons, including coalbed methane. Zimbabwe has an unknown quantity of CBM natural gas reserves, but estimates pit Zimbabwe's reserves as the largest in sub-Saharan Africa, and significantly larger than South African reserves estimated at an astronomical 825 billion tonnes. The gas-energy plants, when constructed, will be responsible for the production of electricity for Zesa Holdings, which is the sole provider of electricity in the country.

Zesa Holdings currently imports a significant portion of its energy requirements from Eskom, South Africa's electricity authority. Eskom produces around 37 000 megawatts (MW), and the company exports power to Botswana, Lesotho, Namibia, Mozambique, Swaziland and Zimbabwe — a heavy burden given increasing demand. In addition, Zimbabwe currently imports all its fuel requirements — a situation exacerbated by fuel shortages as the country is currently battling to raise foreign currency, which is required to purchase the precious commodity. The exploration of CBM natural gas reserves will go a long way in limiting the damaging effects of power and fuel shortages in the country, which have cost the country thousands of billions of dollars in lost productivity in the past six years. In addition, the venture is a welcome development in the search for solutions to the energy challenges facing the Sadc region.

The 13-member region is faced with a potentially debilitating energy crisis likely to manifest itself before 2010. Growing demand caused by increasing urbanization and industrialisation processes have seen energy requirements quadrupling over the past 15- years; posing a serious threat to Sadc economies. Current power sources — which are mainly Hydroelectric and Thermal — in the Sadc community, are struggling to cope with demand. However, market speculation is rife that the company in question is South African energy giant, Sasol Holdings, which once mulled prospects of exploiting the resource in 2003, following invitations by the Zimbabwean government to do so. The arrangement struck up two years ago, would have seen Sasol coming in with the technology, while Malaysian investors were supposed to provide the financing — in a project that would have seen the construction of an unspecified number of gas-energy plants.

Sasol has already declared its interest in exploiting all natural gas reserves in the sub-region, as part of efforts to bolster its current interests in South Africa, and the company has already made significant strides in this regard. The company's vision, according chief executive Pieter Cox, is to play a dynamic role in the development of energy markets in Southern Africa and develop the region's gas, liquid fuels and chemical industries. In 2002, the company pledged to increase production of natural gas in South Africa by almost 220-percent by the year 2010, to counter expected increases in demand for energy in the sub-region. This followed concern noted by the energy giant in 2000, when it referred to the resource as an "underused" resource, which only accounted for 2- percent of South Africa's energy needs. With a market capitalisation of approximately US$16 billion, the oil and gas company remains the strongest contender. Amongst its major strengths are the facts that it is based in South Africa, and that it also possesses world-leading technology used in the commercial production of synthetic fuels, which it uses to convert natural gas to diesel.

Besides being the world's largest manufacturer of oil from coal and coal related products such as coalbed methane, Sasol also has an existing pipeline network that spans 930 miles, linking 600 industrial customers, whose demand for energy has been on the increase in line with global trends owing to a growing world economy. As part of its regional drive in the exploration of Sadc gas reserves, Sasol recently signed an agreement to explore for gas in Mozambique in an area covering more than 11 000 square kilometres off the Mozambican coast. The new agreement will see SPS being the operator, with an 85-percent interest in the venture, while ENH holds the remaining 15-percent. The cornerstone for the project was laid last year, when South African President Thabo Mbeki and former Mozambican president, Joachim Chissano signed an onshore Natural Gas Venture on 1 June 2004. Already, as part of the project, Sasol has invested more than US$5 million in a number of significant corporate social development programmes in Mozambique.

The company has already indicated that it is interested in exploring low-cost gas options for primary markets in South Africa and Mozambique, and secondarily, for the entire Sadc region as the company tightens its grip on the Sadc energy market. Sasol is not the only name to be linked with the exploration in Zimbabwe. State run and owned Mossgass, a company that converts natural gas to petroleum products, could also be in the running. Founded by the South African government, Mossgass is part of the Central Energy Fund (CEF) group of companies through which the State's interest in the liquid fuel industry is owned, developed and managed commercially. The company converts gas into a variety of liquid fuels including motor gasoline, distillates, kerosene and LPG. Officials from Sasol and Mossgass could not be reached for comment.