Ibhubesi Gas Takes Stake in South African Project 8

Ibhubesi Gas Takes Stake in South African Project
8/28/2003
Ibhubesi Gas, in which state-owned petroleum group PetroSA has taken up a 30 percent stake, plans to begin a second phase of drilling off the West Coast of South Africa. PetroSA CEO Mpumelelo Tshume said the company had paid US $40 million (about R300-million) for the equity stake in the gas exploration group. The new phase of drilling is set to begin in September and end in early 2004, and will lift the initial investment in the gas project to US $100 million.

Ibhubesi, which is led by Forest Oil, completed its first phase of drilling in 2001, and indications were of large gas deposits some 280 kilometers northwest of Saldanha Bay. The group also includes Anschutz Corporation, while Tokyo Sexwale's Mvelaphanda Holdings has an option for a 10 percent share.

Forest Oil president and chief executive officer Craig Clark told reporters in Cape Town he was pleased drilling would begin again, and was looking forward to bringing the product onshore. Initial estimates had shown the possibility of the field holding reserves of up to 25 trillion cubic feet of gas. "That is one heck of a lot of gas," he said, adding internationally a find of one trillion cubic feet was considered a large discovery.

Tshume said the gas from the Ibhubesi field would help to extend the life of the Mossel Bay gas field by more than 10 years. "The current determinant of reserves will take us up to June 2008, but we are pretty confident that we will find gas in this important project," he said.

Economic analyses have suggested that the first delivery of gas could start in early 2006 with volumes ranging from 250-350 million cubic feet of gas per day. The gas is expected to be piped to Saldanha Bay, and be used by local industrial customers and for a power plant in the Saldanha area, with the balance sent to PetroSA's Mossel Bay plant.

Minerals and Energy Minister said at the signing ceremony to mark the new drilling phase, that the project was excellent news for the Western Cape. The gas would help to ease the stress on the electricity grid in the province, and, taking the Koeberg nuclear plant into account, would add to the interesting energy mix in the region. "It is very precious this source of energy, and we want to make sure we take good advantage of that," she said.