MDCB invest P35m in Botala Energy’s Serowe gas project
State-owned Minerals Development Company Botswana (MDCB) has signed a non-binding term sheet to increase its proposed investment in Botala Energy’s Serowe gas project by 40%, bringing it to P35 million.
The offer covers a 15% stake in the Coal Bed Methane (CBM) project, along with a 1% royalty linked to future liquefied natural gas (LNG) production. The government’s planned participation reflects confidence in the project’s potential and aligns with its energy security objectives.
MDCB’s investment will fund upcoming drilling, gas flow testing and completion of a bankable feasibility study. MDCB’s proposed equity and royalty agreement will help fund development of Botala’s five-well Pitse Pilot. This is the first of a four-phase plan to deliver an LNG plant producing 3.5 petajoules (PJ) from 108 CBM wells.
The terms of the transaction will be such that MDCB will invest P30 million in exchange for 15% equity in the Serowe CBM Project via a shareholding in Botala’s subsidiary, Botala Gas (Pty) Ltd).
Furthermore, MDCB will pay P5 million for a 1% royalty of the ex-works paid annually over a 20-year term from commercial production. A phased, risk-managed approach to grow production indicates that the project will start revenue generation by phase two with income projected at US$2.65 million from nine gas wells. Revenue is further projected to reach US$10.60 million annually by phase three from 36 wells and eventually US$37.10 million during the fourth phase from 108 production wells.
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According to Botala Energy Chief Executive Officer Kris Martinick, the company is making firm progress to secure the Botswana government’s participation in its Serowe CBM project, evidenced by MDCB’s commitment to significantly increase its proposed investment in the project.
“While MDCB had the option to participate in Sharpay via the government back-in rights linked to the mining license, MDCB’s support extends beyond the license position. MDCB has demonstrated confidence in the scale of the Serowe CBM development by electing to participate in the initial LNG project phase as well. The investment will fast-track gas flow testing at our Pitse Pilot and fund the bank feasibility study for our CBM to LNG development pathway. A strong relationship with MDCB will align interests with the government of Botswana and deliver more than much-needed energy,” said Martinick, adding that local jobs, training and business opportunities will ensure Botswana shares directly in the development of Botswana’s substantial gas resources.
MDCB confirmed its intention to acquire a 15% equity stake in Botala Energy’s Serowe Coal Bed Methane Project in October this year, signalling growing government backing for domestic Liquefied Natural Gas (LNG) production.
