Kinetiko, FFS plan small-scale LNG plant in South Africa

Kinetiko, which in 2023 partnered with South Africa’s development finance institution IDC to develop an onshore LNG project, has executed a non-binding term sheet with FFS for the proposed co-development of a pilot gas liquefaction plant for the production of LNG.

According to a statement by Kinetiko, the term sheet sets out proposed opportunities to expedite small-scale gas production from Kinetiko’s existing cluster of production wells at Brakfontein.

This involves co-funded drilling of an additional production well and upgrades to existing wells, co-funded application for a production right, and gas testing and appointment of a competent person for certification of gas reserves.

The partners plan to sign a binding joint development agreement (JDA) for the first phase within 30 days to establish, among other terms, the respective funding commitments and production activities.

Following completion of the first phase, the duo will develop a business case for LNG production, with additional phases contemplated to expand potential gas production and supply in stages.

Kinetiko executive chairman Adam Sierakowski said the company’s strategy is to partner to develop its “substantial” 6 trillion cubic feet of gas resource (contingent 2C) in phased multi-site development projects.

“Our relationship with FFS has grown from the gas-to-power demonstration in May 2024 to now co-developing a pilot gas liquefaction plant at Brakfontein where the company has already demonstrated successful gas flow from a number of wells,” Sierakowski said.

Phases

Kinetiko said Phase 1a, gas field development, includes the execution of the binding JDA for the first phase during which the duo will provide funding of 20 million rand ($1.13 million).

Kinetiko will fund 67.5 percent and FFS the rest for new wells and the upgrade of two existing wells at the Brakfontein site, and compile the LNG business case proposal ahead of further gas field development.

Subject to a successful outcome of the initial gas field development and production right, the duo
intends to conclude a joint venture (JV) agreement and incorporate the JV entity as part of the Phase 1b.

During this phase, the JV will be responsible for the design and construction of a larger gas field and reticulation system, the procurement and commissioning of a small-scale gas liquefaction plant, and the marketing and distribution of LNG to customers.

Following the approval of the final business case, the duo intended to scale up production of LNG over an expanded production right area, expected to be five times larger than the Phase 1b development, during Phase 3.

During the final phase, the partners intend to collaborate on the further expansion of LNG production over additional tenement areas held by Kinetiko beyond the Brakfontein area.

According to Kinetiko, the expanded LNG production target is assumed to be four times larger than in Phase 2 over the life of the applicable production rights.

This will not ne the first small-scale LNG plant in South Africa.

In September 2022, Renergen launched what it said was South Africa’s first commercial LNG production plant as part of the first phase of its Virginia gas and helium development.

The company recently selected US-based Chart Industries and two other partners for the second phase of its helium and LNG project.