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Deal agreed to build $6 billion Mozambique-South Africa natural gas link

London — * Cooperation agreement 'major milestone'
* To boost gas use across southern Africa

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A cooperation agreement has been signed to build a $6 billion, 2,600 km pipeline to send natural gas from offshore Mozambique to South Africa, the partners in the project said Tuesday.

The planned link will help monetize the vast gas resources of Mozambique's Rovuma Basin and meet growing demand in South Africa for gas for power generation.

The line will also provide offtake opportunities for other countries in southern Africa along the way and will also deliver gas to key towns and settlements across Mozambique.

The Rovuma Basin is thought to hold more than 200 Tcf of gas, enough for the planned LNG projects and the pipeline.

The pipeline cooperation agreement is the most concrete step taken yet to realize the project and "assures the financing commitments required for the pre-investment and engineering studies and the speedy and effective construction and implementation of the project," partner SacOil said.

The other parties involved are Mozambique's state-owned Empresa Nacional de Hidrocarbonetos, private sector consortium Profin, SacOil and the China Petroleum Pipeline Bureau, a leading Chinese and international pipeline construction company.

"The signing of the cooperation agreement is a major milestone," SacOil said.

"The partners believe that the project will be transformational to Africa's energy infrastructure landscape, as well as supportive of economic growth across the region."

Countries from the Southern African Development Community that could also be fed gas include Malawi, Zambia, Zimbabwe, Botswana, Lesotho and Swaziland.

--Stuart Elliott,
--Edited by Jonathan Fox,