US Government Invests In South African Gas Project
JSE-listed gas producer Renergen has announced that the US government has assented to lending them a loan for a gas plant in Free State.
The US government through its development finance institution Overseas Private Investment Corporation (OPIC) will inject ZAR 600 Mn into the project which will be constructed in Virginia.
The emerging liquefied natural gas and helium producer said this loan would provide the required capital to establish the first phase of the Virginia gas project.
Following the deal, Renergen says it will now focus on constructing the facilities and finalising the drilling for the project.
The gas producer has plans to extract and purify liquefied natural gas (LNG) and more so Helium, this is after it discovered very high concentrations of the gas in its test wells.
The global supply of helium outweighs the demand and the situation was so bad forcing Party City, a global store providing party materials, to close 45 of its outlets earlier. Helium’s global supply is under threat, with the commodity surging around 500 percent in the past fifteen years.
The rare gas is also critical to medicine where ultra-low-temperature liquid helium is used to cool MRI scanners.
“It is also a huge endorsement by the US government through the Opic of both the project and the significant importance of securing helium supply,” Renergen CEO Stefano Marani said.
Currently, the US, Qatar, and only a few other countries are producing the entire global supply of helium.
“OPIC is pleased to partner with Renergen and provide financing to support private sector-led economic development in SA, expand trade and commercial ties between the US and Africa, and ultimately increase the global supply of helium,” said Opic vice-president for structured finance, Tracey Webb.
Having completed the final binding agreement, Renergen revealed OPEC will disburse the loan in the coming days.
The current global consumption of helium is about 77 t a day and the company believes it could help meet the demand following the new investment.
Featured Image Courtesy: Irkutsk Oil Company