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Sacoil Holdings Limited - Cooperation Agreement Concluded With New Partners And The China Petroleum Pipeline Bureau For The Construction Of Th

Release Date: 01/03/2016 09:30:00      Code(s): SCL     
SACOIL HOLDINGS LIMITED
(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?)

COOPERATION AGREEMENT CONCLUDED WITH NEW PARTNERS AND THE CHINA PETROLEUM
PIPELINE BUREAU FOR THE CONSTRUCTION OF THE AFRICAN RENAISSANCE GAS PIPELINE IN
MOZAMBIQUE

1. Key Highlights

- A Cooperation Agreement (?CA?) that will result in the construction of the estimated US$6 billion 2
600km, large-diametre pipeline to transport natural gas from Mozambique?s Rovuma Basin to
Gauteng in South Africa, has been signed between Empresa Nacional de Hidrocarbonetos E.P (?ENH?),
the national oil and gas company of Mozambique, Profin Consulting Sociedade Anonima (?Profin?), a
Mozambican private sector consortium, SacOil Holdings Limited (?SacOil?) and the China Petroleum
Pipeline Bureau (?CPP?), a leading Chinese and international pipeline construction company that will
bring a wealth of technical expertise to the pipeline project.

- The CA assures the financing commitments required for the pre-investment and engineering studies
and the speedy and effective construction and implementation of the project.

- The signing of the CA is a major milestone and is in line with SacOil?s strategy to become a leading
Pan African oil and gas company engaged in Upstream, Midstream and Downstream activities.

2. Introduction

On 8 December 2014, SacOil announced that it had entered into a Joint Development Agreement
(?JDA?) with the Public Investment Corporation SOC Limited (?PIC?) and The Instituto de Gest?o das
Participac?es do Estado (?IGEPE?). The JDA set out the terms for an evaluation of the technical and
commercial feasibility of the construction of a gas pipeline and distribution facility intended to carry
natural gas from Mozambique?s Rovuma fields to South Africa, with off-takes to other neighbouring
Southern African Development Community (?SADC?) countries (?the Project?).

3. The Partners

In line with the JDA announcement of 8th December 2014 and as part of the project promotion process
to assure enhanced Mozambican leadership, participation and coordination of the Project
implementation, leading up to the formation of a Joint Venture Company, as well as to assure funding
for the implementation of the Project, SacOil is pleased to announce that ENH, Profin and CPP have
become new partners to move the project forward to implementation. Further details on ENH, Profin
and CPP are provided below.
ENH, the main statutory agency responsible for the development of Mozambique?s hydrocarbon
industry, replaces IGEPE. Profin?s participation assures a leading role for the Mozambican private
sector on the Project. As EPC Contractor, CPP brings a wealth of world class construction, debt and
equity financing expertise to the Project. In accordance with its investment mandate, the PIC will not
be active in the pre-investment phase but remains committed to the development of the Project. The
PIC will retain its position as member of the South African consortium that is being formed and intends
to become a party to the Joint Venture agreement when it is concluded. The pre-investment
consortium therefore consists of ENH, Profin, SacOil and CPP (collectively ?the CA Partners?). The CA
Partners will focus on ensuring that the Project achieves bankability by assuring a solid investor group
drawn from China, Mozambique and South Africa.

4. Cooperation Agreement

The CA supersedes the JDA and leads to the incorporation and operation of the Joint Venture Project
Development Company, which will have Chinese, Mozambican and South African consortiums of
investors as shareholders. The South African Consortium will include SacOil and the PIC. The JV
Company will develop and manage all the initial activities of the Project including requisite pre-
investment studies, which will be performed by CPP. CPP will pre-finance the studies up to bankable
feasibility. CPP will also be the Lead Arranger and shall be responsible for procuring the debt financing
equal to 70% of the total project cost from Chinese financial institutions.

5. Rationale for the Project

If constructed, it is proposed that the 2 600km 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 therefore justify such a pipeline.

The estimated US$6 billion Project is being 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. These are challenges experienced by South Africa and other economies in the region. The CA
Partners, including the PIC, believe 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 a
significant number of jobs and improve living standards for the people of the region.

6.    Commentary

Commenting on today?s announcement, SacOil?s CEO Dr Thabo Kgogo said,

"The Mozambique gas project is central to the growth strategy of SacOil to become a leading Pan
African oil and gas company. The inclusion of ENH and Profin strengthens our partnership with local
Mozambican companies in the area of Oil & Gas and the Energy sectors. Additionally, the Cooperation
Agreement with ENH, Profin and CPP is also in line with our strategy of developing strong strategic
partnerships. We look forward to working with our partners to solve the energy demands of the SADC
region.?

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

JSE Sponsor

PSG Capital Proprietary Limited

1 March 2016


For further information please contact:

 SacOil Holdings Limited                                                       +27 (0) 10 591 2260
 Damain Matroos
 finnCap Limited (Nominated adviser and broker)                                +44 (0)20 7220 0500
 Christopher Raggett / James Thompson
 FirstEnergy Capital (Joint broker)                                            +44 (0)20 7448 0200
 Hugh Sanderson / David van Erp
 Buchanan (Financial PR adviser)                                               +44 (0)20 7466 5000
 Ben Romney / Helen Chan / Madeleine Seacombe



About SacOil

SacOil is a South African based independent African oil and gas company, dual-listed on the JSE and
AIM. The Company has a diverse portfolio of assets spanning production in Egypt, exploration and
appraisal in the Democratic Republic of Congo, Malawi and Botswana, and midstream and
downstream operations including a gas pipeline project in Mozambique and an oil terminal project in
Equatorial Guinea. The Company continues to evaluate industry opportunities throughout Africa as it
seeks to establish itself as a leading, full-cycle pan-African oil and gas company.

About ENH

ENH is a public entity established by Decree in 1981, as the commercial arm of the Government of
Mozambique and with the mandate to participate in the commercialization, sustainable exploration,
development, production, processing, transportation, distribution of the nation?s hydrocarbon
resources. ENH has a 15% share in Area 1 gas field while 85% is held by Anadarko. In Area 4 gas field,
ENH holds 10% stake, while Eni is the operator.

About Profin
Profin Consulting Sociedade Anonima is a special purpose legal entity for investments into natural gas
transportation, related distribution and power production projects in Northern Mozambique, and
incorporated and operating under the laws of the Republic of Mozambique. Profin signed a
Memorandum of Understanding with Empresa Nacional de Hidrocarbonetos (ENH) in October 2015
"with regards to participating as a joint venture partner in the integrated natural gas projects, subject
to technical feasibility and commercial viability?.

About China Petroleum Pipeline Bureau

China Petroleum Pipeline Bureau, founded in 1973, is a professional company of China National
Petroleum Company (?CNPC?) specializing in research, engineering, construction and technology
services and construction. Over the past 40 years, 80, 000 km of onshore pipeline projects, more than
10,00km of offshore pipelines, 30 million m3 of gas storage projects and installation of more than 100
oil and gas processing facilities has been constructed by CPP. Footprints spread in more than 30
countries, like Middle East, Africa, Central Asia, Southeast Asia and America. In Africa, CPP is active in
Mozambique, Tanzania, Kenya, Chad, Niger, Sudan and Libya.

About PIC

The Public Investment Corporation (PIC) is a public asset management firm wholly-owned by the South
African government, with the Minister of Finance as the sole shareholder representative of the
government. PIC?s clients are mostly public sector entities including the Government Employees
Pension Fund, which contributes 90% of the funds that PIC manages. Other clients include
Unemployment Insurance Fund, Associated Institutions Pension Fund, Compensation Commissioner
Pension Fund and Compensation Commissioner Fund.

About IGEPE

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.

Date: 01/03/2016 09:30:00 Supplied by www.sharenet.co.za                     
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