NuEnergy Gas: Expansion in Africa and Rengat Farm-in Offer

November 21, 2013


NuEnergy Gas Limited (NuEnergy) advises of a landmark agreement with a Mozambique party to exclusively explore and develop coal bed methane (CBM) in Mozambique. The party cannot be disclosed under the terms of the agreement.

In Eastern Africa, NuEnergy has:

  • an existing Exclusive Prospecting Licence in Malawi, on the border with Mozambique; and
  • two operating agreements with a Tanzanian coal producer as well as two exploration
  • applications in Tanzania along the southern border area with Mozambique.

Activities will be undertaken the Tete Province in Mozambique, the 5th largest coking coal reserve in the world. Major producers in this region, including Vale and Rio Tinto, are currently developing substantial coking coal reserves.

Mozambique is fast becoming a global gas producer. Substantial offshore natural gas has been discovered and the country is progressing to construct LNG export facilities.

NuEnergy will have the first option to explore CBM opportunities in the Tete Province region as well as evaluate other prospective regions in Mozambique for unconventional gas.

For Mozambique, CBM provides:

  • an onshore resource with options for supply to LNG plants and to inland gas-fired power
    stations capable of generating electricity for towns and villages; and
  • supply to mini CNG plants for compression and use as transportation fuel. The major cost of
    freight in Africa is fuel for road transportation. The current cost of road haulage ranges
    between 9 and 12 cents per tonne per kilometre, 80% of which is fuel. As shown in the United
    States of America, it is possible to achieve cost savings of 30% by utlising compressed gas. This
    is a significant benefit to both coal mine haulage as well as bulk haulage operators.

NuEnergy has access to a specialised drilling rig (Hanjin 45) for CBM which will be mobilized to Mozambique in 2014.

NuEnergy has consolidated its area of exploration in Eastern Africa to Mozambique, Malawi and Tanzania with outstanding potential for unconventional gas discoveries in the region.

Investment/Rengat Farm-in:

NuEnergy is pleased to announce that it has issued a written offer to a potential strategic investor. The offer includes an investment in the company and a farm-in to the Rengat PSC located in Sumatra, Indonesia. The strategic investor is a large Asian diversified multinational group. The group has a turnover in excess of $5bn. Both parties have been in formal due diligence for the past month.

Under the terms of the proposal the farm-in party would provide cash and a carried interest to NuEnergy. It is intended the party would fund the work program of Rengat PSC. From the cash NuEnergy would fund the ongoing work program for the Muara Enim PSC and Muara Enim II PSC located in South Sumatra.

Negotiations between NuEnergy and the party are at an advanced stage. Both parties are working to reach agreement this year.

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