Kinetiko targets commercial gas output with new funding

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Opens in new windowOpens in new windowEnter fullscreen mode displaying this image.ExpandKinetiko Energy is targeting first commercial gas production from its Brakfontein project in Mpumalanga in late 2027. Picture: 123RF/Chutima Sonma Onshore gas developer Kinetiko Energy is targeting first commercial gas production from its Brakfontein project in Mpumalanga late next year, with about A$6m (R70.4m) in projected funding earmarked to advance its initial compressed natural gas development.

The Perth-based company, which is listed on the Australian Securities Exchange, said on Wednesday it had received a further A$400,000 from a share placement announced in July. The fundraising is set to raise A$5.4m before costs, with the remaining A$3.5m subject to shareholder approval at its AGM on November 27.

Kinetiko has allocated about A$3.05m of the planned funding to equipment for the first phase of the project. The rest is allocated to exploration and development, permits, environmental guarantees, working capital and fundraising costs.

Kinetiko has pursued onshore gas exploration in South Africa since the early 2010s. Its interests include Brakfontein and the wider Amersfoort area in Mpumalanga, where it is exploring shallow conventional gas deposits.

Business Day previously reported that in 2023 the company announced it had made huge gas finds near Secunda. The discovery of shallow sandstone gas followed drilling in areas close to the gas pipelines of Sasol, Eskom and other industrial gas users.

In August 2023, Kinetiko, through its now wholly owned subsidiary Afro Energy, signed an agreement with the Industrial Development Corporation (IDC) for the IDC to invest R630m to develop South Africa’s largest onshore liquefied natural gas (LNG) project.

The first stage of the project was initially expected to yield 50MW of gas-equivalent energy, growing to 500MW in the second stage.

The company plans to develop Brakfontein in stages, starting with existing gas wells connected to a facility that compresses the gas for transport and sale. It plans to drill more wells and expand production as development progresses.

Permits remain a hurdle. In its latest project update, Kinetiko said it expected to submit an application for a bulk sampling permit by end-October, with approval anticipated in the first quarter of next year. The permit would allow limited gas production and sales while the company pursues a broader production right.

An environmental assessment for the production right application is under way and initial water-monitoring wells have been drilled.

Executive chair Adam Sierakowski said the funding would support engineering for the first production cluster, progress permitting, and allow the company to drill the next well.

The company has reported significant estimated gas resources across its projects, but those estimates do not mean all the gas can be extracted and sold commercially.

The project comes as South Africa looks at options to diversify gas supplies for industrial users and potential gas-fired electricity generation. The country has relied heavily on pipeline gas from Mozambique and uncertainty about longer-term supply has increased interest in developing domestic resources.

On Wednesday, the electricity & energy department said South Africa’s first gas-to-power tender had closed without a preferred bidder, as bidders were unable to provide assurances of gas supply.

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