Perth-based gas exploration company Kinetiko Energy has confirmed one of South Africa’s most significant onshore gas finds, following about a decade of work in Mpumalanga.

The company has drilled over 40 core exploration holes and eight gas production test wells in the region, resulting in a discovery that is now certified at 6-trillion cubic feet (tcf) of contingent gas resources and a further 5.8 tcf of prospective resources.

“Our success is built on strong local partnerships and regulatory support,” says executive chairperson Adam Sierakowski.

Kinetiko has also achieved certification of maiden gas reserves totalling 6.4-billion cubic feet (bcf). This figure is based on only 0.02% of the company’s exploration rights – most of which are thought to contain gas.

This early certification, he notes, proves the commercial potential of gas production in the area.

The company’s immediate priority is to develop a pilot gas production cluster at its Amersfoort site, where five wells have been completed and two more are planned in the coming months. Once these are in place, Kinetiko will test the wells to assess their potential for commercial production.

One of the most striking aspects of the Mpumalanga find is the geology, says Sierakowski.

The gas is conventional in nature – it is naturally trapped and can be extracted without the need for hydraulic fracturing or chemical stimulation, a major environmental advantage.

“The gas sits in sandstone and carbon-rich layers above the Karoo coal beds. It’s sealed and held in place by hard dolerite rock, creating natural compartments that keep the gas secure.”

The reservoirs, at relatively shallow depths of about 500 m, make drilling faster, cheaper and less disruptive to the environment.

Kinetiko is preparing its application for a production right, aiming to make its first gas sales within the next 18 months.

The company aims to initially supply gas to a small-scale liquefied natural gas (LNG) plant capable of producing 5 000 t/y. From there, the LNG can be transported by truck – a “virtual pipeline” – to industrial customers in the region. The modular production plants enable the operation to scale up quickly as more wells come online.

The company’s long-term vision is to establish larger production fields closer to major energy infrastructure, including the State-owned power utility Eskom’s Majuba power station, and State-owned company Transnet’s Lilly pipeline, which runs through Kinetiko’s exploration area.

“Being right next to the customers that need it most gives us a huge advantage,” Sierakowski states. This approach would also enable Kinetiko to supply multiple markets, diversify its revenue and grow steadily over the years.

Government Policies

The Gas Master Plan and the Just Energy Transition plan underpin Kinetiko’s operating environment.

Sierakowski says the company works closely with regulators to align its projects with national priorities. Its 6 000 km² of exploration rights provides the flexibility to develop production scenarios with low environmental impact, strong community employment potential and secure landholder agreements.

The timing of Kinetiko’s discovery is fortuitous, as South Africa faces a looming gas cliff with the rapid decline of long-term gas imports from Mozambique. While renewables remain an important part of the future energy mix, Sierakowski believes that they cannot yet provide the reliable baseload power required to support consistent economic growth.

“Affordable domestic gas with a lower carbon footprint can make a substantial difference in the near term,” he says.

Although it is still early for binding offtake agreements, Kinetiko has formed partnerships to advance development.

These include collaborations with national developmental finance institution the Industrial Development Corporation and energy company FFS Refiners. Both are interested in helping to finance production feasibility studies and potentially becoming offtakers once production starts. Kinetiko plans to build on such partnerships to fast-track its gasfields into operation.

Although aware that regulatory approvals in the evolving energy sector can take time, the company says it is well-positioned to navigate the process, with support from strategic South African investors and a long record of securing international capital.

Environmental engagement is also a priority.

“We want to show that a project like this can be developed with minimal environmental impact and significant benefits for landowners and nearby farms,” Sierakowski says.

Further, the company’s development plans could have a major socioeconomic impact on Mpumalanga.

Over the past decade, Kinetiko’s exploration has created jobs for local communities and, as the company scales up, it plans to drill numerous wells in different locations. This is a “strategic opportunity” to boost employment, build skills and generate wealth for communities, says Sierakowski.

“We have the resource, the partners and the vision. Now, it’s about turning this potential into reality,” he concludes.