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Home » Industry News » Petrochemicals Oil & Gas » Virginia SEZ? – no pipedream says Renergen CEO

Virginia SEZ? – no pipedream says Renergen CEO

IN an exclusive interview with CBN editor Robin Hayes, Stefano Marani, CEO of Renergen – the Free State helium and LNG producer, outlined the company’s second phase development plans and speculated on support for a government sponsored SEZ (Special Economic Zone) to exploit the company’s helium and natural gas discoveries.

Stefano Marani.

“Having secured the necessary finance of $750 million to proceed with the development of phase 2 of developing what is really a new gas industry not only in the Free State, but for South Africa, we are currently assessing tenders of EPC contractors for the construction of facilities to meet our production targets of 4 200 kg/day of helium and 600 000 kg /day of LNG” explained Marani. “This is a substantial increase over our phase one production of just 300 kg/day of helium. As had been widely reported our helium discovery has a purity of up to 12% in some wells – probably the highest of any producer anywhere in the world. This discovery hadn’t escaped our friends in the USA who are the major consumers of this rare gas, used in hi-tech industries such as semiconductor manufacture, cryogenic research, medicine, fibre optics, the nuclear industry, welding and generally aero-space and defence – all strategic industries.

“As a consequence the US International Development Finance Corporation has pledged $500 million of the total investment pool, pending the listing of Renergen on the Nasdaq; the deal we have struck is that 50% of our expected production has already been pre-sold mainly to American interests, with the balance being available on the spot market. 

“The balance of $250 million investment has been secured from Standard Bank, so with the money flow confirmed, we can proceed with phase 2 with confidence” he said.

The world market for helium upstream is $2,7 billion pa – 2021 figures and is projected to rise to $3,9 billion pa by 2031 according to several global business analysts.

Renergen’s current production of natural gas for liquidation (LNG) and helium comes from just 19 wells via a gas pipeline of 50km connecting them to the production facility. Its 187 000 ha site allows for further exploitation by drilling several hundred more wells.

Not just helium

“While our helium business is very exciting our LNG business has huge potential too. We have established LNG customers in Gauteng and the Western Cape via a virtual pipeline to Ardagh –formally Consol Glass and Italtile’s Ceramic Industries which is delivered by tanker trucks. We have also signed an agreement with Timelink Cargo amongst others to supply LNG to their fleet of trucks. Burning LNG results in a significant reduction of pollutants and carbon footprint compared to diesel, is a cheaper substitute, a ‘home grown’ fuel, much more environmentally friendly and requires relatively little modification to an IC engine produces substantial cost and environmental benefits.”

Gas to power – not anytime soon, but perhaps

“While there is much in the media about the potential of gas to power as a counter to loadshedding, it should be remembered that the exploitation of natural gas discoveries is not a five minute thing. We have reached our stage of commercial LNG development after a long 10 year road and our phase 2 plant is only coming on stream in 2026/7.

“Gas to power, while having huge potential in the country, isn’t our main focus, although we will be constructing our own 30MW power station to be grid independent as part of the phase 2 developments, so the tail won’t be wagging the dog when it comes to power-outages. That doesn’t mean that the huge discoveries of exploitable methane in Mpumalanga won’t have the potential to transform the energy picture; but it won’t happen overnight for very practical reasons.

“We have under consideration a mega gas fired power station that could consume 20 – 25% of our projected gas delivery but it is early days on this front.”

Vision for development of hi-tech industries

“There are much broader implications of our development of a gas industry in the Free State, besides being a profitable venture for shareholders. Beneficiation of our raw materials by other countries boosts their economies and creates jobs which could be ours if only there was the will and strategy to create an investment friendly environment to embark on such developments. 

“This has been seen in Austin, Texas where $500 billion worth of stimulus was granted to make investments into micro chip manufacturing facilities – recognised as strategic industries, in order for the US to become less dependent on these vital technological products from other supplier countries, notably Taiwan. There is no reason why our Virgina facilities couldn’t be the catalyst to form a manufacturing hub for similar hi-tech industries exploiting our own helium and LNG. The prospect of creating an SEZ has been discussed with the Free State Provincial Government with an enthusiastic response from those who recognise the potential for job creation and the generation of economic prosperity, not only in the Free State but for the country as a whole” he concluded.

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