Australian gas explorer Kinetiko Energy is joining forces with South Africa’s development finance institution IDC to develop an onshore LNG project in South Africa.
According to a statement by Kinetiko, its unit Afro Energy has signed a non-binding term sheet with the IDC to co-develop a new joint venture for the appraisal and production of LNG to deliver 50MW with a potential to grow to 500MW of gas equivalent energy.
Kinetiko said that Block 1 will feed the first stage of the LNG project, while further blocks will feed the expanded project of 500MW.
This could become the largest onshore LNG project in South Africa, the firm claims.
Renergen currently operates a small LNG plant in South Africa and supplies the fuel to the transport sector.
Kinetiko said the first stage 50MW project is estimated to cost about A$138 million ($89 million) comprising A$90 million equity and A$48 million debt.
IDC will equity fund about A$52 million for 30 percent JV interest, while Afro Energy will equity fund about $A38 million for 70 percent JV interest.
While offtake agreements are not in place, Kinetiko has executed a memorandum of understanding with FFS Refiners and letter of intent with Gruner Energy for the potential offtake of LNG, it said.
The partners estimate that Block 1 for 50 MW equivalent of LNG will be developed over 2-3 years and further blocks for 450 MW equivalent of LNG will be developed over 9-10 years.