The Ibhubesi Gas Project (IGP) is a mature natural gas field development with eleven wells drilled thus far consisting of seven gas discoveries, which is an encouragingly high success rate.
Having over half a trillion cubic feet (Tcf) of proven gas reserves at a 2P level and situated 80km off of the Northern Cape coast, the current IGP gas reserves could potentially provide electricity to a city of 1 million people for about ten years, making it a significant source of clean energy in the country.
With added investment, up to 8 Tcf or 16 times the current proven reserves, could be added to the domestic energy mix.
In addition to the direct and indirect jobs that could potentially be created, the investment in the development of the IGP, which could top over ZAR20-billion ($1.443 billion), would be a true upstream and downstream industry creation catalyst throughout its lifespan.
The field was initially discovered by PetroSA (the South African national oil company) predecessor, Soekor, in the mid-1980s, and has since enjoyed the benefit of over ZAR1,6-billion ($115 million) of investment in exploration, appraisal and development.
Sunbird Energy (Sunbird), a South African start-up that is listed on the Australian Securities Exchange (ASX), acquired the IGP in December 2012 as a part of its strategy to develop southern African gas resources where limited domestic gas supply and growing energy needs have created significant opportunity for the development of large scale energy projects.
Musa Capital, a wholly-owned division of Musa Group (a diversified operating company with operations in key development sectors of the economy), based in Johannesburg, has assisted in the privatisation and “Africanisation” of Sunbird together with Umbono Capital (a black-owned resources and energy investment and project development company) and several other local investors.
In addition to advising on the transaction, Musa sees the IGP as an important addition to its project portfolio, as it supports empowerment, energy security and job creation. The company believes in doing things for Africans, led by Africans, which made the partnership a perfect fit.
IGP is currently developing several market off-take opportunities, including providing fuel that could substitute diesel with gas at Eskom’s Ankerlig Power Station situated in the Western Cape. In addition, the IGP is ready for the development of new gas-fired Independent Power Producers (IPPs) along with other value-adding industrial applications.
“Job creation, skills development and sharing forums are an integral part of the deal, which the team is proud to be part of,” Musa Group’s CEO, William Jimerson, said.
Executive chairman of Sunbird Energy, Kerwin Rana, said that restructuring the company was central to its vision of being African-led, while operating commercially and sustainably.
“We are looking at this project as being of strategic and national importance to South Africa, and we want local investors to be part of the development. The new, ‘Africanised’ IGP is now over 50% black-owned with 24% still being owned by PetroSA,” Rana said.
Sunbird said the deal will encourage further exploration and development in the West Coast Orange Basin, which has many highly prospective areas, including the well-known Kudu Gas Field in Namibia.
As a result of the Musa structuring of the financing arrangement which enabled Sunbird’s delisting from the ASX, not only was there a significant capital investment but also a unique set of skills and expertise which were brought to our shores as a result of this transaction.
“I truly appreciated Musa’s innovation and partnership and now that we are a private company, we can structure the organisation and drive the business model appropriately. At the appropriate time, we may well reconsider a public listing, possibly on the JSE,” said Rana.
With a potential off take agreement with Eskom, as well as other local and international markets being pursued, Sunbird Energy is poised to become one of South Africa’s leading gas development companies as it seeks to develop its gas assets for market availability by 2020.
Jimerson said the group was delighted to successfully structure a deal that brought with it numerous benefits. This allowed for South Africans to be owners in a project that will burn cleaner fuel and contribute to our energy security.
For more details on this development contact: Preshan Segers
Account Manager, South Africa
T +27 11 235 4600
M +27 81 456 0489
Weber Shandwick, 22 Westbrooke Drive, Sandown, Sandton 2031, Johannesburg, South Africa