State-owned power utility Eskom has signed a memorandum of understanding (MoU) with gas explorer Sunbird Energy to jointly investigate the feasibility of securing gas from Sunbird’s offshore Ibhubesi gas project to supply Eskom’s 1 350 MW Ankerlig power station, some 40 km north of Cape Town.

This came as Eskom was advancing its plans to replace Ankerlig’s existing high-cost diesel feedstock with natural gas and convert the plant from an open-cycle gas turbine (OCGT) to a closed-cycle gas-turbine facility.

Under the MoU, ASX-listed Sunbird and Eskom had agreed to jointly investigate the economic and commercial viability of the development of Ibhubesi in the 5 000 km2 Production Right Block 2A, located off the west coast of South Africa.

The utility would be tasked with completing several studies to determine the viability of indigenous gas sales from Ibhubesi, including identifying the governance process for the replacement of the existing diesel feed stock with indigenous natural gas, in conjunction with Ankerlig’s OCGT conversion project.

Eskom would further be held responsible for determining the procurement process necessary for a formal gas sales agreement to be entered into in respect of Ibhubesi – South Africa’s largest proven gas field.

Meanwhile, under the MoU, Sunbird would complete the field development plan and the front-end engineering and design plan for Ibhubesi.

The agreement would also see the establishment of a working group, comprising representatives from both parties, who would progress the objectives of the MoU.

Sunbird Energy chairperson Kerwin Rana said the agreement with Eskom was a significant milestone in the project’s development and would likely result in the delivery of an indigenous gas supply to the “energy-constrained” west coast of South Africa.

The Ibhubesi gas project, which has been identified as a strategic infrastructure project under the Presidential Infrastructure Coordination Commission, boasts proven reserves of 210-billion cubic feet as well as proven and possible reserves of 540-billion cubic feet.

It is expected to establish the first critical pipeline infrastructure in the region, providing a route to market and encourage further exploration and development.

The tenement is located in the offshore Orange Basin, about 70 km off the coast, in water depths of 250 m.