By Staff Reporter
Invictus Energy Limited has entered into a non-binding memorandum of understanding (MoU) with local fertilizer maker, Sable Chemical Industries, to progress gas supply from the Cabora Bassa Project subject to commercial gas discovery being made.
Under the terms of the MoU, Sable would be contracted to take 13 billion cubic feet of gas per year, with an option to increase to 26 billion cubic feet.
The supply term of 20 years provides strong revenue visibility in the event that Cahora Bassa is transformed into a source of commercial gas supply.
Sable is the sole manufacturer of agriculture grade ammonium nitrate fertilizer in Zimbabwe and a potentially large gas consumer.
Under the MoU, Invictus and Sable have agreed to jointly work together and co-operate with regards to investigating the economic and commercial viability of supplying natural gas from the Cahora Bassa project to the Sable fertilizer plant, located near Kwekwe.
Invictus managing director Scott Macmillan said the offtake agreement was a positive development in terms of their company’s prospective earnings profile, and would also be a significant factor in making the company satisfactorily negotiate financing terms and make the project increasingly attractive for potential partners.
“Signing this MoU with Sable marks a significant milestone in our commercial negotiations as we look to progress the Cabora Bassa project,” he said in a release announcing the deal. “Sable is the sole producer of nitrogenous fertilizer in Zimbabwe and a well-recognised brand in the country.
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“We are proud to work with them to fulfil their ambition of becoming the preferred manufacturer and supplier of fertilizers and other chemical products in Africa.
“The potential gas supply of up to 70 million cubic feet per day for 20 years is a substantial volume, which will help underpin the development of any commercial gas discovery we make in the Cahora Bassa Project.”
Sable Chemicals was established in 1969 and currently operates a fertilizer manufacturing plant, which produces ammonium nitrate fertilizers from ammonia gas feedstock currently imported from South Africa.
It’s plant has capacity to produce 240 000 tonnes of ammonium nitrate yearly.
The potential future supply of gas by Invictus is also critical for Sable’s medium-term expansion programme aimed at increasing production to 600 000 tonnes of nitrogenous fertilizers.
