South African energy and chemical company, Sasol, said Mozambique debt crisis and lower oil prices will not affect the company’s $1.4 billion gas project.
The company announced the cost will be covered by the South African energy company and recouped through gas revenues.
Mozambique had missed a loan repayment deadline in May, plunging one of the world’s poorest countries into a debt crisis.
Regardless of the country’s cash-crunch, the company said it will continue with oil and gas developments adding that the Mozambican government’s financial obligation will come from the proceeds of gas sales.
“Despite the issues that they have in the country, this is the core part of the strategy and we are here for the long haul, so we will help them just as we did when we first got involved. Over a decade ago this situation or conditions were similar and we managed to get something that worked and we are confident we will do the same going forward,” head of exploration and production at Sasol, John Sichinga.
Sasol owns 70 percent of the project, the Mozambican government holds 25 percent through its national company CMH and the International Finance Corporation owns 5 percent.
Mozambique is sitting on huge gas reserves and developing liquefied natural gas export projects expected to bring tens of billions of dollars to the impoverished state.
Sichinga said they supply over 300 customers with the gas, which is a clean, environmentally friendly fuel and efficient fuel.
“Next door, you’ll see that there’s a site that we have prepared for oil production – 15000 barrels per day of oil and 20000 tons per annum of LPG, which is part of the liquid processing facility. And for us, it shows that we are committed to Mozambique, investing in a time when the oil price or committing to invest in a time when the oil price is so low.”
Sasol’s project, which lies about 600 km (372 miles) north of the capital Maputo, will be rolled out in stages. The first phase will include an oil, liquefied petroleum gas and gas project adjacent to its Pande and Temane fields.
The company drilled the first of 12 planned wells in its new oil and gas field in Mozambique last week with first production expected in mid-2019.