Emerging liquefied natural gas and helium producer, Renergen, on Wednesday said it had signed a US $40 million loan agreement with the Overseas Private Investment Corporation (OPIC) for a gas project in the Free State province.
Renergen’s principal asset is its 90 per cent shareholding in Tetra4, which holds the first and only onshore petroleum production right in South Africa, giving it a first-mover advantage on the distribution of domestic natural gas.
OPIC is the United States government’s development finance institution that mobilizes private capital to help solve critical development challenges and advances the foreign policy of the United States and national security objectives.
Renergen said this loan would provide access to the capital required to construct the first phase of the Virginia gas project.
It also said this was a major endorsement of the project by the US government, and the increasing importance of securing helium, with significant supply shortages forecasted.
Stefano Maran, Renergen chief executive, said the agreement would provide them with access to an efficient source of capital to progress the Virginia gas project towards production, and an endorsement of the significant importance of securing helium supply.
“We are extremely proud to be working with the OPIC as our financial partners and we look forward to developing the project together as we ascertain the full extent of the amount of helium that could be produced during a time of severe supply constraint,” Maran said.
“As our track record has demonstrated over the last two years, we remain focused on our philosophy of setting achievable milestones and delivering on our commitments, as the company develops the Virginia gas project.”
The signing of the loan agreement follows the announcement of the appointment of EPCM Holdings subsidiary, EPCM Bonisana, as the engineering, procurement and construction contractor to commence construction of the Virginia gas project.
Renergen first announced the OPIC’s intention to finance the Virginia gas project in February this year prior to the company’s listing on the Australian Stock Exchange.
The commitment was subject to execution of a final binding agreement between the parties by no later than the end of September. Having executed the final binding agreement, the company will receive the first disbursement from the loan in the coming days.
The collective completion of these agreements provides a greater degree of certainty on the commencement of revenue from the project, which is now anticipated in the first half of 2021.
Tracey Webb, OPIC vice president for structured finance, said they were pleased to partner with Renergen.
“OPIC is also pleased to provide financing to support private sector-led economic development in South Africa, expand trade and commercial ties between the U.S. and Africa, and ultimately increase the global supply of helium,” Webb said.
Renergen will now focus on commencement of construction activities, whilst finalising parameters around the drilling targets.