South African Market
The Amersfoort Project is located at the heart of South Africa’s energy, mining and transport infrastructure and close to the major population centres of Johannesburg and Tshwane (Pretoria).
- Growing demand for energy in South Africa is being met with shortages.
- Government support and regulatory measures to prioritise the domestic gas sector.
- Current constraints on imports and new exploration rights limits the competition.
Consequently, commercialisation scenarios for Amersfoort gas are varied in both nature and scale. However, a common factor for all scenarios is a growing need for energy in all forms in South Africa.
There is now strong government support for gas as documented in the Integrated Resources Plan 2018,
- This has specific focus on the energy sector
- Prioritising the development of a domestic gas sector
- Upstream and downstream developments
This is all in place while there is a current moratorium on granting of onshore gas exploration rights and a deepening energy crisis with limited capacity to increase gas imports into South Africa.
This situation gives Kinetiko and Afro Energy a clear advantage and reduces competition for potential gas supplies.
Regulatory measures are attempting to diversify energy demand to overcome increasing shortages in particular sectors like electrical power.
Demands for all forms of energy are growing throughout sub Saharan Africa. The South African parastatal electrical generator and transmission company Eskom has in recent years been finding it increasingly difficult to meet peak demands of the countries that constitute the Southern African Power Pool, including South Africa.
Eskom not only faces considerable challenges in financing and building new generating and transmission capacity but has also had issues with supply of coal to its power stations.
Energy input demand is further growing in the region for industrial usage, petrochemicals manufacturing, fertilizers and transport fuels.
Gas price assumption
High value markets with regulator-approved maximum prices among the highest globally.
The existing markets in the Newcastle, Durban, Amersfoort, Ermelo, Volksrust and manufacturing and transportation centres of the Johannesburg metropolis and surrounding areas mainly comprise coal, HFO, Petrol, Paraffin, LPG, diesel and waxy oil users.
Regulated maximum prices for these energy products have dramatically changed over recent years making the identified markets high in value.
The current approved maximum retail prices for gas traders set by the National Energy Regulator of South Africa (NERSA) range between 7-10US$/GJ, some of the highest gas prices for domestic markets anywhere in the world.
Infrastructure and Commercialisation
- Strategically located amid existing, high-quality infrastructure
- Presents a range of attractive potential strategies for commercialisation
Due to the location of the Afro Energy Amersfoort Project and granted Exploration Rights, this potential energy project sits amid multiple infrastructure resources that will facilitate commercialisation of the project.
Potential commercialisation scenarios for Amersfoort include but are not limited to:
- Gas sales into the existing coal powered generation plants for flame control and ultimately for full co-generation. The Majuba Power Station, a 4,110MW coal fired facility, is located within sight of the Amersfoort Project. Majuba requires around 50,000t of coal a day, which is currently transported by truck and railway from various sources in the East Transvaal coal fields. In addition to Majuba there are 10 additional power stations within 300km all utilising the existing high voltage power infrastructure
- Gas supply into the existing gas transmission (Transnet’s Lilly pipeline) and distribution network in Durban.
- Independent Power Production (IPP) either grid coupled or direct to a major customer such a local mine or manufacturing facility. Mini LNG interfaced IPP for peak load and distributed demand.
- CNG production, distribution and transport networks already exist in South Africa. These virtual pipelines utilise rail and road to supply gas to manufacturing customers, fleet transport depots mining and domestic end users. The operators of this capacity, (Whom we have relationships with) are able to obtain all necessary permitting from NERSA to transport CNG produced from our fields.
Afro Energy has commenced discussions with a range potential customers and government agencies charged with infrastructure development and national energy matters and has received several Expression of Interest from key potential off takers and downstream demand. This demand driven enquiry is driving the development of the production strategy now in place.