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SACOIL HOLDINGS LIMITED - Sacoil, the PIC and IGEPE Sign a Joint Development Agreement

Release Date: 08/12/2014 15:00:00      Code(s): SCL     
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
JSE Share Code: SCL     AIM Share Code: SAC
ISIN: ZAE000127460
(?SacOil? or ?the Company?)


1. Introduction

Further to the announcement dated 31 March 2014, SacOil, the
Public Investment Corporation SOC Limited (?PIC?) and The
Instituto de Gest?o das Participac?es do Estado (?IGEPE?)
(collectively ?the JDA Partners?) have signed a Joint
Development Agreement (?JDA?) dated 03 December 2014 to
evaluate the technical and commercial feasibility of a
transnational terrestrial gas pipeline and distribution
facility that will carry natural gas from Mozambique?s
Rovuma fields into South Africa, with off-takes to other
neighbouring Southern African Development Community (?SADC?)
countries (?the Project?).

2. Salient features of the JDA

Under the JDA, whose effective date is 03 December 2014, the
JDA Partners will work together to evaluate the viability of
the Project. The feasibility studies will cover engineering,
market development, gas purchasing, economic, financial,
technical and commercial risk profiles as well as environmental,
social and regulatory issues.

The JDA partners are currently setting up a technical working
group (?TWG?) to commence pre-feasibility studies. A
project company will be incorporated to ensure that total
focus on the Project is maintained and emphasis will be
placed on local ownership of businesses along the entire
value chain.

3. Rationale for the Project

The Southern African energy market has been constrained by
shortages for many years. Natural gas accounts for a very
small portion of the energy demand in South Africa (3%
versus 21% globally). The South African Government has
stated its objective to reduce CO2 emission levels and to
increase the use of natural gas (PwC 2012, The Gas Equation
Report). The demand for natural gas is also expected to
grow in Botswana, Malawi, Mozambique, Zambia, Zimbabwe and
Africa in general. The main driver of this demand for gas is
expected to be from gas-fired power stations, vehicle and
related downstream industries and domestic consumption
(International Energy Agency, World Energy Outlook report

The gas market in South Africa, which is the industrial
powerhouse of Africa, is driven by demand from the Saldanha
Industrial Development Zone, the Mossel Bay gas-to-liquid
plant, the Mossel Bay and Atlantis diesel-fired power
stations, an array of ageing coal-fired power stations,
which could be converted to gas, as well as possible new
power stations in Coega and Richards Bay.

If constructed, it is proposed that the 2,600 km main
pipeline from northern Mozambique to South Africa will, en
route, deliver gas to key towns and settlements in all
provinces of Mozambique, thereby stimulating industrial
growth in the country. The indicative gas requirements of,
as well as benefits to, Mozambique and South Africa appear
to justify such a pipeline.

The estimated $US6 (six) billion Project is proposed to be
designed to make energy affordable to a greater proportion
of the population, promote clean energy, reduce oil import
bills, lower carbon footprint and carbon tax, all of which
are challenges experienced by the economies of southern
Africa. It is the JDA Partners expectation that the Project
will be transformational to Africa?s energy infrastructure
landscape, as well as supportive of economic growth across
the region. The Project will also seek to increase the
international competitiveness of southern African economies,
create many jobs and improve living standards for the people
of the region.

4. Commentary

SacOil?s CEO Dr Thabo Kgogo said, "The Mozambique gas
project is key for the economic transformation of Southern
Africa. Our participation is in line with SacOil?s long term
strategy of being a leading Pan African oil and gas

Further updates in this regard will be provided to SacOil
shareholders as and when new developments occur.

IGEPE is an agency of the Government of Mozambique
established by law to manage investment portfolios and
shares of the Republic of Mozambique in commercial ventures,
in particular, the promotion and management of the state?s
equity participation in strategic projects. SacOil is an
independent African Oil and Gas company with dual listing on
the Main Board of Johannesburg Stock Exchange and the AIM
Board of the London Stock Exchange. The PIC is an investment
management company and the largest fund manager on the
African continent, established by an Act of Parliament and
wholly owned by the Government of the Republic of South

8 December 2014

JSE Sponsor

PSG Capital

For   further     information   please

SacOil Holdings Limited
Tariro Mudzimuirema                    +27 (0)11 575 7232

finnCap Limited (Nominated Adviser
and Broker)
Matthew Robinson / Christopher         +44 (0)20 7220 0500

FirstEnergy Capital (Financial
Adviser and Joint Broker UK)           +44 (0)20 7448 0200

Majid Shafiq / Travis Inlow

Instinctif Partners London (UK
Investor Relations)
David Simonson / Anca Spiridon         +44 (0)20 7457 2020

Instinctif Partners Johannesburg (SA
Investor Relations)
Nicholas Williams / Fred Cornet        +27 (0)11 447 3030

Date: 08/12/2014 03:00:00 Supplied by www.sharenet.co.za                     
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