Government is looking for investors to inject $1 billion into a coal bed methane gas project in Lupane under public private partnership or joint venture arrangement. Although the natural gas was discovered in the Lupane-Lubimbi area in Matabeleland North a few decades ago, commercial exploitation has not started due to lack of funding.
Exploration and pilot production studies were conducted, and showed that the natural gas resource could be exploited commercially for domestic and industrial use.
Mines and Mining Development Permanent Secretary Munesushe Munodawafa, said the project required huge investment and the search for investors was underway.
“We were targeting to start extraction of coal bed methane gas by December 5, 2017. We have been behind on this aspect.
“This is one of key projects we want to look at because going ahead natural gas will become key because of its potential benefits.
“Just to give an example, if we do coal bed methane, we will not only have energy and electricity. There are also by products like Ammonium Nitrate,” said Munodawafa.
Once extraction commences, he said, irrigation infrastructure would be set up in Matebeleland North to avoid flooding, as the extraction produces huge volumes of water.
“Because we have identified the wells in Matabeleland whether we like it or not, we have to do some irrigation because there will be so much water from the process that if we do not do irrigation, the whole of Matabeleland North will be flooded,” he said.
Government is, however, trying to convince potential investors on its preferred equity structure. The investors have previously raised concerns with regards to Community Share Ownership Trusts, and have proposed to be excused of the legislation.
To date, only Discovery Resources has made progress at its concessions in the Siwale area in Mzola, Lupane. After successful exploration work in the last two years, it has started producing, with the company now ready for commercial exploitation.
Lupane Gas, a unit of Government owned Industrial Development Corporation, which has also been doing exploration works on one of the sites in Lupane, failed to raise the $12 million required to ascertain if the resource was commercially viable.
In an era where oil and gas are now key commodities, Zimbabwe could benefit immensely from the exploitation of the gas, which accounts for about 23 percent of the world’s commercial energy mix, according to the Organisation of Petroleum Exporting Countries.
The appetite for gas consumption is also growing in Zimbabwe with the Zimbabwe Energy Regulatory Authority saying that the country experienced a significant rise in household consumption of liquefied petroleum gas in the past three years.
Through exploitation of coal-bed methane gas, analysts say Zimbabwe could turn from a net importer of fertilizers to a net exporter, which would help preserve hard currency.
Coal-bed methane gas is used to produce hydrogen, which in turn is used in the manufacture of ammonia for fertiliser.
Fertiliser maker, Sable Chemicals, has also hinted on plans to transform its production processes to using gas as opposed to high cost electricity.