Gazprombank, owned by Russia’s state gas supplier Gazprom, confirms it is likely to bid for what is potentially a multi-billion rand deal – which, if awarded, would raise questions on whether SA’s Ukraine stance is influenced by its thirst for gas | Fin24
The Central Energy Fund is rushing to conclude a tender that will help it secure natural gas for the country for the next five years.
The Central Energy Fund released a tender last month, looking for a gas aggregator to help secure liquified natural gas for various gas-to-power projects planned for the Coega special economic zone in the Eastern Cape.AmaBhungane has confirmed that SOCAR, the state-owned oil company of Azerbaijan, and Gazprombank, which is owned by Russia’s state-owned natural gas supplier Gazprom, are contemplating bids.
Gas aggregators are not unusual in the energy sector; Singapore has appointed several – including Shell and Exxon – to bring LNG into the country. CEF also wants the gas aggregator to arrange a bank facility of up to R20 billion to fund day-to-day trading. The gas aggregator will also"assist in sourcing, negotiating, and concluding gas supply agreements" and develop hedging strategies to offset the volatility of the rand/dollar exchange rate.
This uncertainty is responsible for some of the scepticism in the market as some worry that the gas aggregator will be stranded in the backwaters of the Eastern Cape, eagerly waiting to supply vast volumes of natural gas to projects that never materialise. In September, SOCAR opened an office in Johannesburg and appointed Tumelo Motsisi, founder of Kopano Ke Matla, COSATU’s investment arm, as one of its directors.Gazprombank is also likely to bid:"We are evaluating the potential participation in the gas aggregator tender issued by CEF, given the group's extensive experience in the gas sector," the Johannesburg branch told amaBhungane in a written response.
Vitol, the Dutch commodity trader that was widely expected to bid, declined to say if it would participate in the tender, but amaBhungane understands that it will also sit this one out, leaving SOCAR and Gazprom in a strong position. In 2017, PetroSA signed a $400-million deal with Rosgeo, the geological exploration arm of the Russian state, to carry out seismic surveys and drill exploratory wells off the south coast.
In February 2020, PetroSA signed a new memorandum of understanding, this time with Gazprombank – now run by Rosgeo chief executive Roman Panov – to"co-operate with each other and jointly evaluate the development, construction and operation" on a natural gas import hub in Coega.that Gazprombank had offered to fund the project, estimated to cost at least R7 billion.
Before entering the private sector, Gounden served in government and briefly as a director of the ANC funding vehicle Chancellor House. So far only the gas aggregator role has advanced to a request for proposal , but CEF has said it will soon issue a second tender to secure gas infrastructure. For the ultimate buyers – you, me and Eskom – the question is, can we afford to buy electricity sourced from natural gas?
This was more expensive than Eskom’s own fleet, which generates power for 95c/kWh, but cheaper than the diesel-fired peaker plants that, in 2020, delivered emergency power at R6.87/kWh. In the long term, Karpowership expects LNG prices to"return to single digits", although futures contracts still put the price at around $20/MMBTU at the end of 2023.
It is a gamble that CEF and its minister are willing to take, even as Ramaphosa and Eskom move in the opposite direction.In 2020, CEF laid out a turnaround strategy that would pivot the loss-making group into a vertically-integrated oil and gas company.
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