South Africa´s New24.com published yesterday an article that Eskom is asking for bids to convert its Mossel bay power station from diesel to gas. Block 11B/12B is the only potential gas supplier nearby. Eskom would not be planing a diesel to gas conversion if it did not have a certainty of gas supplies.
It indicates that Eskom is getting ready for gas supplies from Block 11B/12B. Africa Energy share price has been sliding, as the off-take agreement has not been reached, yet. This may indicate the waiting may be over. Very positive for Africa Energy and its shareholders.
Last week we published notes from our call with the Africa Energy management. It described that Africa Energy/Total have three potential customers for its gas from Block 11B/12B:
- Eskom – its Mossel Bay power plant is burning diesel. They have enough diesel, but it is more expensive than gas. Eskom could save around 30% by burning gas.
- Petro SA – is the owner of the Block 9 infrastructure. Total/AEC will need to use the infrastructure to supply gas to Mossel Bay. Petro SA owns gas to liquid plant in Mossel Bay, which is out of gas, as Block 9 is depleted – they do need gas.
- LNG liquefaction plant for export to Europe or Asia
As mentioned there is no other nearby gas supplier for Eskom than Block 11B/12B. Eskom is now asking for bids to convert its power plant from Gas to Diesel. Eskom would not be doing this if they would not believe their gas supplies are secured. It may mean that the off-take agreement may be coming soon. If correct, Africa Energy share price should be moving. Very positive.
The article important quotes:
Eskom has finally put out a request for proposal (RFP) to supply Gourikwa power plant in Mossel bay and Ankerlig power station in Atlantis with natural gas.
The two power stations run on diesel, but have been converted so they can also use natural gas. The utility hopes to switch from diesel to gas by December 2027.
“The intent is to have a gas main feedstock which will be supplemented by diesel as and when it’s required,” Eskom stated in tender document published this week.
It is hoping that gas will be a cheaper and more environmentally friendly source of fuel for the two stations than diesel.
All bids for the RFP will need to be in by 31 July.
Full article:
Minutes of the call with Africa Energy management:
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