Southern African gas explorer and developer, Sunbird Energy Ltd (ASX:SNY) announced on 24 December that it has signed a Memorandum of Understanding (MoU) with the South African State owned power utility Eskom to jointly investigate gas supply from the offshore Ibhubesi Gas Project (IGP or the Project), South Africa’s largest proven gas field to Eskom’s 1,300 MW Ankerlig Power Station.
Under the MoU, Sunbird and Eskom have agreed to jointly investigate the economic and commercial viability of the development of the Ibhubesi Gas Field in the 5,000 km2 Production Right Block 2A, located off the west coast of South Africa.
Sunbird Energy Chairman, Kerwin Rana, said that the MoU with Eskom is a very significant milestone in the development of Ibhubesi.
“We are delighted to be working with Eskom to progress this nationally significant project of domestic gas supply for South Africa. Additionally, we acknowledge the support of our joint venture partner in the project PetroSA (24%), the national oil company of South Africa, as well as our South African black empowerment partner Umbono Capital, in bringing these discussions to this important stage,” Mr Rana said.
“This MoU sets the framework under which Eskom and Sunbird will jointly investigate the development of the Ibhubesi Gas Project for the delivery of an indigenous gas supply to the energy constrained west coast of South Africa.”
Eskom is the owner of the Ankerlig Power Station and is advancing planning for the supply and delivery of natural gas to the plant to replace the existing high cost diesel feed stock. Eskom is also currently developing plans to convert the plant from an Open Cycle Gas Turbine (OCGT) to Close Cycle Gas Turbine (CCGT) facility.
Under the MoU, Sunbird will undertake the following activities to investigate indigenous gas sales from the Ibhubesi Gas Project to Eskom’s Ankerlig Power Station:
• Complete the field development plan for the Ibhubesi Gas Project; and
• Complete the Front End Engineering and Design (FEED) for the Ibhubesi Gas Project.
Under the MoU, Eskom will undertake the following activities to investigate indigenous gas sales from the Ibhubesi Gas Project to Eskom’s Ankerlig Power Station:
• Complete the necessary studies to determine the work required, including the governance process (approvals), for the replacement of the existing diesel feed stock with indigenous natural gas, along with the OCGT conversion project.
• Determine the procurement process necessary for a formal gas sales agreement to be entered into in respect of the Ibhubesi Gas Project.
The MoU also sees the establishment of a Working Group, with representatives from both parties who will progress the objectives of the MoU.