By doing that, every single liter a truck consumes as LNG means less diesel that needs to be imported. This protects the balance of payments of the country and beneficiates a product from well head all the way to the end user, domestically.
There is no reason that the helium side of it cannot act as a catalyst either. Helium in its purest form is used in many applications such as MRI’s. But there are a number of other industries in South Africa that do not exist, which, having helium available, could exist. For example, semiconductor manufacturing; high end electronics; basically, everything related to space exploration and fiber optic cables. There are a lot of ancillary industries which we as a country could begin in South Africa, and there is no reason why the Free State Province cannot be the hub for manufacturing because now there is a source of clean, sustainable energy, an abundant labor force and it is equally equidistant to all the labor ports in South Africa.
What needs to be done to create a viable domestic market for the helium in South Africa and are there any plans by Renergen to open this market?
We have had discussions on a governmental and provincial level and with various businesses. From a helium perspective, it is trickier because you essentially need to convince someone to set up a semiconductor factory, which is quite a task. But suffice it to say, we have got all the strategic advantages. Semiconductors are best manufactured at very high altitudes and the Free State is at 1.5km -; they are best manufactured in dry conditions and the Free State is quite dry; and they need helium, which we now have. Strategically, it makes sense but it will take a lot of pulling together of business interest and government interest.
What is the status of Phase 2 of the Virginia Gas Project? When can we expect financial close and the start of construction?
We are well underway with the credit committees, the U.S. International Development Finance Corporation and the secondary lender. We are anticipating, over the course of the next few months, that we will get through the various stages of committees, following which we will go Final Investment Decision. Thereafter, we will need to wait for the US Securities and Exchange Commission and the Johannesburg Stock Exchange to come up with a timetable for the potential listing of Nasdaq.
Shortly after the IPO we will commence construction. It will be an early campaign of very intensive drilling once we finalize the design work, which is about 95% complete. From there, we anticipate to physically break ground in the fourth quarter, with production initiating in 2026.
In December 2022, the South African government declared the Virginia Gas Project a Strategic Integrated Project under the Infrastructure Development Act. What does this mean for Renergen and what message do you have for potential investors?
From an oil and gas industry perspective, this should send a very clear message to investors that, all noise aside, the upstream oil and gas industry is open for business in South Africa. From a strategic level, when the government starts planning for the distribution and delivery of energy all over the country, our project falls part of that plan. The most immediate benefit, which is the benefit for shareholders, is that the approval process has to be shortened to a maximum stipulated time frame of 57 days.
Where does natural gas fit into South Africa’s energy mix and how does Renergen plan on contributing to improving energy security in South Africa?
Energy security is a massive challenge and is not to be disregarded. One of the things I need to say is that Renergen is not going to be the silver bullet for South Africa’s challenges. The deficit of energy in South Africa is very significant.