Petrochemicals group Sasol has found oil in onshore wells in Mozambique and aims to bring the fossil fuel to production for the first time in the southern African nation, one of its joint chief executives said Feb. 27.
Oil production will raise the hydrocarbon profile of Mozambique, an impoverished nation in the throes of a financial and debt crisis, which has vast untapped offshore gas reserves and inland coal deposits.
“This will be the first oil wells in Mozambique that go to full development. Probably in two, maximum three years,” Stephen Cornell told Reuters in an interview after the company announced interim results.
The company earlier said four of 12 planned wells had been drilled and the results had been surprising.
“We have drilled four wells, two of them gas, two of them oil, all showing positive results. In one of the areas where we expected mostly gas we found gas and oil,” Cornell said.
The company has issued a “notice of discovery” to the government.
Cornell told Reuters that Sasol had discovered oil in Mozambique before but as “part of an appraisal of the field and that helped us know where to drill.”
But he said Mozambique was still “primarily a gas play.”
Mozambique has some 85 trillion cubic feet of gas reserves—enough to supply Germany, Britain, France and Italy for nearly two decades. It is likely to take at least five years after final investment decisions before gas production begins.
Sasol also said it had entered “a number of hedges to mitigate specific financial risks ... Approximately 50% of the crude oil exposure was hedged with crude oil put options for 2017 at a net price of $49.50/bbl.”
Sasol is scaling back planned capex this year in the face of a strengthening rand as it posted a fall in interim earnings.
Its capex estimate for the full year was cut to 66 billion rand (US$5 billion) from 75 billion rand “largely due to the impact of the stronger rand/U.S. dollar exchange rate.”
Sasol’s products are priced in dollars but much of its costs are rand-based. Forex movements also have valuation implications for its balance sheet.
Half-year headline earnings per share (HEPS) fell 38% to 15.12 rand, in line with what the company had previously flagged to the market. Sasol attributed the decline to rand gains and to a strike at its Secunda mining operations.
(US$1 = 12.9615 rand)
Recommended Reading
Deep Well Services, CNX Launch JV AutoSep Technologies
2024-04-25 - AutoSep Technologies, a joint venture between Deep Well Services and CNX Resources, will provide automated conventional flowback operations to the oil and gas industry.
EQT Sees Clear Path to $5B in Potential Divestments
2024-04-24 - EQT Corp. executives said that an April deal with Equinor has been a catalyst for talks with potential buyers as the company looks to shed debt for its Equitrans Midstream acquisition.
Matador Hoards Dry Powder for Potential M&A, Adds Delaware Acreage
2024-04-24 - Delaware-focused E&P Matador Resources is growing oil production, expanding midstream capacity, keeping debt low and hunting for M&A opportunities.
TotalEnergies, Vanguard Renewables Form RNG JV in US
2024-04-24 - Total Energies and Vanguard Renewable’s equally owned joint venture initially aims to advance 10 RNG projects into construction during the next 12 months.
Ithaca Energy to Buy Eni's UK Assets in $938MM North Sea Deal
2024-04-23 - Eni, one of Italy's biggest energy companies, will transfer its U.K. business in exchange for 38.5% of Ithaca's share capital, while the existing Ithaca Energy shareholders will own the remaining 61.5% of the combined group.