CEF completes due diligence on R1bn Renergen Virginia Gas Project investment

The state-owned Central Energy Fund (CEF) has completed its due diligence related to an agreement with JSE-listed Renergen to invest R1 billion for a 10% stake in the gas producer’s 20-year Virginia Gas Project, based in the Free State.

This follows Renergen’s recent announcement that the project, which is anticipated to expand and eventually produce liquid helium and liquified natural gas (LNG), was in its final commissioning workstreams with commercial operations at customer sites expected to commence at the end of July.

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Renergen noted in a Sens statement issued on Wednesday that the completion of due diligence has facilitated engagements from both parties to obtain final approvals to complete the transaction.

“The successful conclusion of the due diligence signifies [the] strategic nature of the Virginia Gas Project and further marks another significant step forward in closing out the capital required for Phase Two operations at Virginia,” adds Renergen’s CEO, Stefano Marani.

“We look forward to working with the CEF [which] also brings with it a wealth of experience in upstream oil and gas exploration, midstream natural gas to liquids processing and lastly large-scale pipeline operations and maintenance experience.”

Marani says the deal will aid in bringing a new and critical source of energy at a time where South Africa is suffering a significant energy crisis.

Noting the project’s delays as a result of the Covid-19 pandemic, Marani says Renergen has no intention of rushing the process at this stage and introducing risk.

“Since commencing construction at Virginia, prior to Covid, the total delays experienced in the context of several global macro events of the past two years could have been significantly worse had we not implemented several mitigations to reduce the overall impact on the project,” he adds.

Marani says Renergen is excited at the prospect of the first liquid being produced by the plant in due course which will see the company move from a developer to a producer.

Nondumiso Lehutso is a Moneyweb intern.