The South African government has signed an agreement to acquire a major stake in an onshore gas project operated by Australian junior Kinetiko Energy.
The deal will see South Africa’s state-owned Industrial Development Company (IDC) obtain a 45% stake in the Amersfoort asset in exchange for R70 million (4.8 million of dollars).
For its part, Afro Energy will place R85 million in the Joint Development Agreement pot to support its 55% stake.
Although small, the deal signifies the government’s intention to help commercialize local gas assets, while pursuing solar, wind and hydrogen projects in parallel.
Afro Energy, a subsidiary of Kinetiko, said the joint development agreement aims to produce gas for industrial, commercial, transportation or power generation applications.
The proposed scheme will include approximately 20 wells capable of producing approximately 500 million cubic feet per year
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The IDC has a first equity interest in up to 45% of the next 80 wells developed by Afro Energy.
Commenting on the deal, Kinetiko Chairman Adam Sierakowski said, “Kinetiko’s vision to become a major player in onshore gas production in South Africa has reached an important milestone with the finalization of agreements with the IDC, a leading national development finance institution, to co-invest in the development of a gas field adjacent to the company’s existing Amersfoort wells. »
He said the deal represents the first investment in Kinetiko by a “substantial South African institution and will accelerate the company’s ambitions to rapidly develop numerous gas fields on the vast gaseous geology identified”.
The agreement covers Exploration Right 12/3/271, with development divided into two 10-well phases.
The first phase will also include the construction of a gas terminal with a treatment and treatment plant, a meter station and a pipeline collection system.
A binding agreement covering the IDC and Afro Energy shareholder loan agreements is to be signed by August 1 this year.
Afro Energy has already drilled a group of wells at five points near Amersfoort and has five other approved sites nearby, as well as five exploration well sites to the south.
Applications are filed for ten other wells near the Korhaan well group near Amersfoort.