Molopo South Africa Exploration, a division of Molopo Energy, has been awarded production rights over an area of approximately 200,000 ha in the Free State province, becoming the first onshore gas production rights to be awarded in South Africa
"We are very pleased to have secured this first onshore production right, which represents an exciting development for both South Africa and for Molopo," said Molopo manager for South Africa, Peter Price.
"We and our Black Economic Empowerment (BEE) partners are looking forward to contributing to the enhancement of the local community."
An estimate of Molopo SA's reserves and resources in the Virginia License area was performed during the exploration phase in 2010.
Proved reserves were then estimated at approximately 9.2 bcf with provable reserves of approximately 23.0 bcf. The production right application was based on this exploration work.
Molopo's overall net interest in the project is 80 per cent after BEE and government participation.
The initial phase of development of this project will be the tie-in of four of the 11 pilot production wells where gas flow of approximately 1.2 mmcf/d continues.
The timing and detailed scope of these development plans will be finalised over the coming months.
The capital investment outlined in the production right is approximately US$2.5 million in the first year, $4mn in the second year and $9mn in the third year.
In the longer term, the full field development could result in the development of more than 200 wells.
