South Africa-based chemicals and energy company Sasol plans to begin producing oil in Mozambique within three years, which would mark the first oil output in the impoverished African country, Sasol's joint chief executive Stephen Cornell told Reuters in an interview on Monday.
Mozambique is primarily known for big offshore gas reserves in which companies such as Italy's Eni SpA and U.S. Anadarko invest.
Now Sasol is betting on oil production.
"This will be the first oil wells in Mozambique that go to full development. Probably in two, maximum three years," Cornell told Reuters.
"We have drilled four wells, two of them gas, two of them oil, all showing positive results. In one of the areas where we expected mostly gas we found gas and oil," the manager noted, adding that Sasol had sent a "notice of discovery" to the Mozambique government.
In May last year Sasol said that it started drilling of the first well under its Production Sharing Agreement (PSA) license in Inhambane province in Mozambique. Back then the first phase of the PSA Development -- which includes the drilling of 13 production wells -- was anticipated to cost around US$1.4 billion.
In its press release on the results for the six months ended December 31, 2016, Sasol said today that the first phase of the development of PSA license area remains on budget and schedule.
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"To date, four wells have been drilled and completed, two gas wells in the Temane G8 reservoir and two oil wells in the Inhassoro G6 reservoir…The third oil well (or fifth well) was spudded in early February 2017," the company said.
Sasol is confident that "the economics to develop the Production Sharing Agreement license area remain positive", Cornell said in the statement.
On the downside for the group's plans for the full fiscal year 2016/17 though June, Sasol said that it is revising down its total capital expenditure, mostly due to the impact of the stronger
South African rand/US dollar exchange rate, in addition to cash conservation initiatives and active management of its capital portfolio.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More