Invictus inks gas supply deal with Mbuyu Energy

Invictus Energy, the Australian company searching for oil and gas in Muzarabani and Mbire districts of Mashonaland Central province, has executed an updated gas supply memorandum of understanding (MoU) with Mbuyu Energy for the latter’s proposed 500-megawatt (MW) gas-to-power project.

The Australian firm intends to supply the gas for the project from its 80 percent-owned and operated Cabora Bassa Project in northern Zimbabwe after the company recently declared gas discovery at its Mukuyu-2 exploration well in Mbire.

Further exploration will be done in the firm’s expansive licence area across Muzarabani and Mbire districts in the north of Zimbabwe.

Zimbabwe faces an acute shortage of electricity, as demand far outweighs supply, which is managed through rolling cuts from the grid, causing serious disruption to economic and social activities across the country.

Demand for power in Zimbabwe peaks around 2 200MW-2 600MW, depending on season, while supply currently averages about 1200MW-1400MW, assuming new generators installed at Hwange Power Station are running at full throttle.

“Invictus Energy and One Gas Resources have executed an updated Gas Supply MOU with Mbuyu Energy, a Zimbabwean consortium led by IPP developer Tatanga Energy.

“The consortium, which includes existing Invictus’ institutional shareholder Mangwana Opportunities Fund, is seeking to develop a 500MW Gas to Power project,” Invictus said in a statement released this week.

Invictus said following the recent confirmation of the discovery of gas at its Cabora Bassa Project in Zimbabwe, the updated MOU built on the previous MOU signed in December 2019 with Tatanga Energy.

The MOU is a precursor to the negotiation of a full long-term gas sale agreement (GSA) to supply sufficient gas to power the proposed plant.

The plant can be expanded in future phases to up to 1 000MW (equating to a forecasted demand of approximately 1,4 trillion cubic feet of natural gas over 20 years). The company estimates the Mukuyu fields to hold 34,9 trillion cubic feet of condensate gas.

Condensate gases are used for power generation, and manufacture of products such as petrol (gasoline), jet fuel, diesel and heating fuels, among other uses.

The discovery of gas is expected to drive Zimbabwe’s economic growth, export earnings, Government revenue, create new jobs and downstream industries among other positive spin-offs.

Invictus said the updated MOU will see the parties working together to assess the feasibility of developing the project utilising gas produced from the Mukuyu field or any other field developed in the Cabora Bassa project.

The power project will be developed in line with world-class standards and will support the further integration of renewable sources of energy into the National Grid.

According to Invictus, the project will be designed to minimise its environmental footprint and will utilise an efficient Combined Cycle Gas Turbine configuration (CCGT) that will incorporate cutting-edge carbon reduction technologies.

The development of the Gas to Power Project will be synchronised with the broader development of the Mukuyu field and the Cabora Bassa project as a whole including gas production, transportation and the processing infrastructure required to provide natural gas feedstock to the power plant.

Preliminary feasibility studies have identified several suitable locations that provide the ability to supply electricity through the local grid as well as potentially export to customers through the Southern Africa Power Pool (SAPP).

The Mukuyu gas field is located within 100 kilometres of 3 major interconnectors to the SAPP grid, which provides the ability to export power to any country in the region.

Mbuyu will enter into discussions with several existing high-energy demand power off-takers including large-scale miners, industrial and other large-scale users of energy, many of whom currently import their electricity from neighbouring countries.

The project will supply much-needed reliable and affordable baseload power to these companies. The ability to source reliable baseload power from a new domestic supply will provide significant economic benefits to potential customers, many of whom have had to curtail operations and expansion plans as a result of the power deficit the country is currently facing.

This is the second major Gas Sale MOU executed for the Cabora Bassa project following the MOU executed with Sable Chemicals to provide gas feedstock for the manufacture of ammonium nitrate fertiliser which is currently supplied by rail from South Africa.

Managing director Scott Macmillan commented “Signing this MOU with Mbuyu Energy to develop a 1 000MW Gas to Power project is another significant step forward in our early commercialisation strategy as we look to progress the Cabora Bassa project following our gas discovery at Mukuyu.

“The potential offtake is a substantial volume of gas of up to 1,4 trillion cubic feet which will underpin the commercialisation of the Mukuyu gas field. This MOU demonstrates the huge demand in an energy-starved market in Zimbabwe and the wider region.

“Natural gas and power are in high demand in southern Africa due to increasing supply shortages of natural gas from mature fields that are now in decline, the retirement of over 10 000 MW of aging coal fired power infrastructure in the region and the increasing adoption of gas for industrial use and as a source of cleaner energy.

“We look forward to working closely with Mbuyu Energy and our partners One-Gas Resources to progress the project and with the ultimate goal of providing reliable and affordable baseload power to Zimbabwe and the region.”

Director of Mbuyu Energy Tunde Akerele Commented: “We are thrilled to join forces with Invictus and One Gas Resources to not only unlock the immense potential of the Mukuyu discovery but also pave the way for a cleaner and more sustainable energy future for Zimbabwe.

“This MoU signifies a critical step forward in transitioning Zimbabwe away from its reliance on coal power generation and towards a more diversified energy mix that includes natural gas and renewables.

“The introduction of much-needed dispatchable energy for the national grid will enhance energy security, reliability, and facilitate the increased integration of renewables.

“The project also has significant potential to drive economic growth, fostering new industries, creating jobs, and stimulating broader economic development across Zimbabwe.

“We are confident that the Gas-to-Power Project represents a turning point for Zimbabwe’s energy sector and its journey towards a cleaner and more prosperous future.

“We look forward to collaborating with Invictus, One Gas Resources, and all stakeholders to bring this transformative project to fruition and unlock a brighter energy and economic future for the nation.”

Tatanga Energy has built a strong operational team that leverages the invaluable relationships that they have formed over time with local and international advisers, investors, lenders, and EPC contractors.

Tatanga Energy is currently developing 3 Renewable Energy projects in Zimbabwe consisting of 2 grid-scale solar projects and a wind project.

The company’s flagship project is a 400 MW solar photovoltaic (PV) park that is being developed with Masawara Limited and Sable Chemicals Limited

According to Invictus, the project will be designed to minimise its environmental footprint and will utilise an efficient Combined Cycle Gas Turbine configuration (CCGT) that will incorporate cutting-edge carbon reduction technologies.