Botswana Oil sparks activity in CTL industry
Brian Benza | Friday June 16, 2017 19:00
In a tender flighted this week, the state-owned oil company said, together with the Ministry of Mineral Resources, Green Technology and Energy Security they are seeking prospective private companies and or parastatal bidders to undertake a bankable feasibility study, finance, construct, own, operate and maintain a coal to liquids plant in Botswana.
“The objective of the Prequalification is to assess and identify bidders, including joint ventures, consortiums, who can undertake a bankable feasibility study, design, finance, construct, own, operate and maintain a coal to liquids plant in Botswana to be facilitated by BOL,” reads the tender document.
The CTL process involves conversion of coal into liquid fuels, including chemicals using several liquefaction processing to produce products such as petrol, paraffin, diesel, liquefied petroleum gas (LPG), ammonia, wax and chemicals.
BOL says it is aggressively promoting the development of CTL as it brings immense benefits for the country, including the creation of an estimated 4,000-5,000 jobs as well as potential for exports, creation of newer industries and educational opportunities.
According to BOL estimates, it will cost about $4 billion (P40 billion) to construct a CTL plant in Botswana but government does not have the finances, hence the invitation for private companies to carry-out the project with the state oil company being the off-taker.
The tender comes on the background of an announcement by a New York based company, Tec CTL that it has received a letter of commitment of a total of 20,000 barrels per day (bpd) from BOL, with the parties agreeing to negotiate an off-take agreement over the coming months.
BOL says it has been getting a lot of unsolicited proposals from emerging companies in the oil and gas industry that aspire to venture into the CTL industry.
“BOL’s response letter to these proposals is standard, stating that BOL supports the companies’ initiative in principle and conditionally offers off-take on their product refined from a local plant on conditions that include their product meeting the local petroleum products specifications, consistency and sustainable quantities of the petroleum products at any given point in time as well as price affordability,” BOL chief executiver officer, Willie Mokgatlhe told Mmegi BusinessWeek.
This week, Tec CTL announced it has signed a financing term sheet of up to $3 billion with an American Private Equity firm, Milost Global, Inc.
According to Tec CTL, the working capital facility, which is being provided as a combo of debt and equity, will be key in developing a 80,000 bpd plant in Botswana.
Ogaisitse Khama, vice-executive chairman of Tec CTL, commented: “After receiving a commitment from Botswana Oil Limited last week, it is becoming rather evident that we are making headway towards becoming the first integrated Oil & Gas Company to develop a CTL project that will produce Synfuels in Botswana. This financing becomes a cornerstone to a build-up to our IPO that will help us trade on the New York Stock Exchange”.
Tec CTL says it targets to have the first phase of the plant in production within the next 18 to 24 months. Botswana’s current demand for petroleum products stands at 1.2 billion litres per annum, all of which is imported.