PRIVATE PLACEMENT OF SHARES
Renergen plans to raise funds for its gas project
The gas producer aims to raise R125m through a private placement to help fund construction of South Africa’s first onshore liquefied natural gas facility
Gas producer Renergen would embark on a roadshow shortly to raise a minimum of R125m through a private placement of shares to help fund construction of a pipeline and liquefaction facilities at its Tetra 4 wells in the Free State, CEO Stefano Marani said on Monday.
This will be SA’s first onshore liquefied natural gas (LNG) facility. Sasol imports a slightly different product, natural gas, via a pipeline from onshore wells in Mozambique for industrial customers around Gauteng. The Department of Energy is also planning to import LNG for power generation.
Renergen’s pipeline will take gas only from the wells to the compression station and once it is turned into LNG, it can be transported nationwide by road and stored by its customers.
It is particularly suitable as fuel for vehicles as it offers a range similar to diesel.
In May, Renergen secured a R218m loan from the Industrial Development Corporation to develop Tetra 4. One of the conditions was that Renergen had to secure a positive record of decision from the Petroleum Agency SA on its environmental impact assessment. This was obtained on September 29.
Marani said he would be flattered if Sasol considered Renergen a competitor or potential takeover target, but Sasol offered a different product and in huge volumes. Renergen would be offering a niche product for a handful of corporate customers.
Initial production of LNG would be about 25 tonnes a day and if further drilling was successful, this could be ramped up within about five years to about 150 tonnes a day.
The shares surged 7.9% to R11.60 after the announcement.
Renergen will shortly release results for the six months to the end of August.