Zak Mir interviews Noel Lyons, CEO Karoo Energy regarding progress at the Southern Africa focused gas exploration company.
ZM: I have listened to your presentations on a number of occasions. But presumably not everyone in the world is familiar with Botswana and Karoo and what you do. Maybe you could give us an introduction?
NL: We are a gas exploration company. We specialise in the exploration of unconventional gas. Our target area for exploration, at the moment, is Botswana, which is in Southern Africa as in the south of the continent, next door to South Africa.
ZM: The first thing, I suppose, these days is South Africa is not known as being a particularly stable situation, at the moment. What’s the situation in Botswana?
NL: Botswana is the complete opposite. It’s regarded as the most stable country in the whole African continent, not just economically, but politically and socially. The Botswana economy is underpinned by diamonds and De Beers have their world’s headquarters there, so Botswana has been a safe zone for many, many years due to the access to their minerals in the ground, so they have the highest GDP of the whole of the African continent as well, very well-educated workforce and just a very, very stable political and economic structure.
ZM: As far as how you managed to choose Botswana, and there are potential resources there, was it by accident or design?
NL: I’d love to be able to tell you it was by design, but actually it was really by accident. We were looking for assets in Africa and an asset in Botswana was the first one we came across which made the most sense to us.
ZM: In the UK we’re currently grappling with the billion barrels of oil which are allegedly under The Weald. What are we looking at as far as Botswana is concerned? Is it going to be as good at the Gatwick Gusher or various other type of situations where private investors are full of high hopes?
NL: I think we have to just take a step back and look at it slightly differently because the focus, from our perspective and from the perspective of the Botswana government, is that they need energy, they need a secure and reliable source of energy. We have 150,000 square kilometres of licence area, which is a prospector for shale gas, and the potential, if we compare it to South Africa itself, they have an estimated reserve of shale gas in the region of 340 trillion cubic feet and, in fact, we are in the same basin, which is the Karoo basin which is where we get our name from which stretches up into Botswana, obviously the difference being that South Africa is a little bit less stable from many perspectives compared to Botswana, but the real prize here for our investors is that, assuming we access the gas, that we convert that gas into electricity, because electricity is the big problem in this part of the world. At the moment, Botswana’s importing approximately 80 per cent of its electricity mainly from South Africa and that leaves it in a very, very vulnerable position. Let’s assume for one minute that we have the gas in the ground, the indications are good, but I can’t guarantee it, but let’s assume it’s there, our plan is to convert it into electricity, and the market alone in Botswana is valued at approximately $1 billion US a year. That’s without any other big industry coming in. First of all, 80 per cent of that $1 billion is being imported, we want to service that market internally in Botswana, but more excitingly there is a huge demand for all of the countries surrounding Botswana, and they’re already linked because it’s one of the best kept secrets of this part of the world that they have something called the Southern African power pool and that power pool. It links all of these countries so that they can buy and sell or transfer electricity between themselves. That gives you access to a huge market. Assuming we can produce electricity in Botswana, not only can we service the domestic market, but we can service the international market and potentially export back into South Africa at some point as well. The potential for this project is enormous.
ZM: So there is an infrastructure there which is actually, maybe counterintuitively is already there, which you might not expect to be the case?
NL: Exactly, and it’s not just the physical infrastructure, you have the political infrastructure already done and dusted and agreed through the group of Southern African countries called SEDEC. Effectively it’s a Southern African version of the EU, although maybe that’s not being fair to them.
ZM: Or for the EU.
NL: Yes.
ZM: What are the timelines for potential, well for private investors as they are, and potential private investors as far as Karoo Energy is concerned?
NL: The timelines are that we’re about to commence on a fundraising at the moment. We’re looking to raise approximately £3.5 million. The purpose of that money is to do some further work on our licence areas, and our aim, at the end of that, which will take probably six to 12 months, is to have an estimated reserve ourselves of gas. Once we get to that point, then the whole game changes because with an estimated reserve the project is bankable then so there are other ways of raising funding, raising finance. But on top of that we’re in negotiations with some serious gas expertise who are proposing to join us as partners in the project. Ultimately this is a $100 million project, so what we’re doing now is we’re building the foundation so that we have the potential to achieve what we aim to achieve. We can’t do it alone. We need to bring in the technical expertise, so we’re very busy working on that as well. There are several potential milestones that we have knocked out over the next six to 12 months, which will have a big impact on the overall project in a positive way.
ZM: So there is patience involved, but not a ridiculous degree?
NL: No, and because we’re at the point where the project is about to take off on every level. Don’t forget we’ve been working in Botswana for the last almost five years so we’ve done all that slow, painstaking scratching around. Now we’re really ready to start promoting this project properly. Our approach has always been to be conservative. In other words, we weren’t one of the companies that wanted to go out and start screaming and shouting about stuff before we really felt secure about it, and now we do, so now we’re ready to go.
Editorial Disclaimer
SME news and commentary
NEX Exchange Limited (”NEX Exchange”) accepts no responsibility for the content of this article or for any reliance placed by you or any person on the information contained therein.
By providing access to this material NEX Exchange does not intend to solicit business or offer any securities to any person in any country, whether directly or indirectly.
Articles available on nexexchange.com may be produced by independent third parties and are for distribution only under such circumstances as may be permitted by such third parties and applicable law. They are published solely for informational purposes and should not be construed as a recommendation to sell, buy or hold any product, investment, security or any other financial instrument. Any opinion, view or idea contained in any article is the author’s own and does not reflect or represent the opinions, views or ideas of NEX Exchange, nor any of its affiliates, directors, officers, employees or agents. Publication of the article does not signify endorsement by NEX Exchange of any of the information contained therein. NEX Exchange is not involved in the preparation of any such articles and does not make any representation or warranty, express or implied, as to the accuracy, completeness, suitability or correctness of any of the information presented by individual authors in the articles. In no circumstances will NEX Exchange, or any of its affiliates, directors, officers, employees or agents, be liable for any indirect or direct loss, or consequential loss or damages including without limitation, loss of business or profits arising from the use of, any inability to use, or any inaccuracy in the Information or views contained in the articles. Any opinions expressed in the articles are subject to change without notice and are not to be relied upon as investment advice, which should be sought from your independent advisers. NEX Exchange is under no obligation to update or keep current the information contained in the articles.
Please refer to the NEX Terms of Use for further information
