Sasol chief executive David Constable. Photo: Simphiwe Mbokazi.

South African petrochemicals group Sasol plans to build a 140 MW gas-to-power plant in Mozambique, with first power from the project expected in late 2013, Henri Loubser, the head of Sasol's new energy unit said on Thursday.

The plant will be built via a joint venture with local power utility EDM, which is expected to take a 51 percent stake in the project, Loubser said at a company presentation . The power will be mostly used for the Mozambican market, he added.

“We will have to take our investment decision in the first half of next year ... it can be built in just a bit longer than 12 months,” Loubser told Reuters.

The plant is expected to cost around 1.8 billion rand ($220.6 million), in line with a similar project Sasol is developing at its Sasolburg operations in South Africa.

Loubser said he did not foresee any problems in sourcing money for the project, neither for Sasol nor Mozambique's EDM.

“Southern Africa is so in need for electricity that if you have the right technology, a good feedstock like gas, you will always find the lenders to support such a project,” he said.


Sasol, the world's top maker of motor fuel from coal and one of South Africa's top emitters with around 60 million tonnes of CO2 per year, has increasingly been diversifying into chemicals, gas and clean energy projects to better position itself in the low-carbon power sector.

The firm, criticised by environmentalists for doing little to streamline its operations towards a carbon-free economy, said it had set a target to reduce its emissions intensity by 15 percent across its operations by 2020 from a 2005 baseline.

It also plans to make any new coal-to-liquids (CTL) plants more efficient by reducing emissions of those built before 2020 by 20 percent and those built before 2030 by 30 percent.

Sasol plans to generate 60 percent its power needs by 2013 to beat rising electricity prices and to reduce its dependence on the national grid, especially as utility Eskom struggles to supply rising demand from industrial and residential users.

The firm, as part of a national initiative, is also studying the option of capturing and storing carbon emissions.

Sasol said the aim was for a test injection of carbon at a yet to be identified site to happen in 2016, but it would take years before the technology could be applied on a larger scale.

“If you look at a realistic timeline, we are speaking of 10-15 years before you can potentially do it at a scale that would be of interest to South Africa,” Ebbie Haan, the head of Sasol's petroleum unit said.

In a bid to reduce its carbon footprint, Sasol is investing heavily in exploration for feed stocks other than coal such as coal bed methane gas in Botswana and natural gas in Mozambique.

Sasol currently sources gas from the onshore Pande/Temane field in Mozambique, but plans to drill an exploration well in the country's M10 offshore block in the third quarter of next year, hoping to emulate gas discoveries recently made in the southern African country by US explorer Anadarko Petroleum and Italy's Eni. - Reuters