Nasdaq- and JSE-listed advanced materials company ASP Isotopes (ASPI) says oil and gas producer Tetra4 has entered into a contract for the sale of liquefied natural gas (LNG) to be produced at the Virginia gas project in the Free State.

The LNG sale and purchase agreement is a five-year, take-or-pay contract with a South African food processor, and this offtake represents about 10% of the project's Phase 1 nameplate capacity.

The price per unit is set at greater than $16/GJ of LNG, on an all-in plant-gate basis, at current exchange rates, ASPI says.

Tetra4 is a subsidiary of liquid helium and LNG company Renergen, which is a subsidiary of ASPI.

“South Africa's domestic energy situation has proved challenging during recent years and the LNG produced from the Virginia gas project is welcomed by local industrial businesses to support their energy needs,” says ASPI CEO and executive chairperson Paul Mann.

“We look forward to completing the construction of Phase 1 and, in addition to supplying domestic customers with LNG, starting to supply international customers with liquid helium at a point in time when geopolitical issues have greatly constricted the supply of this critical material.”

Phase 1 is expected to produce approximately 2 500 GJ/d of LNG and about 70 000 cubic feet a day of liquid helium, with commercial production expected to commence during the third quarter of this year.

Assuming $15/GJ to $18/GJ for LNG and an average of $600 per thousand cubic feet for liquid helium, Renergen should be capable of generating revenues of more than $27-million a year following the expected completion of Phase 1.

ASPI expects to begin recognising these revenues during the second half of this year.

ASPI is in active discussions with additional potential customers for offtake of LNG and liquid helium from both Phase 1 and Phase 2.

It expects to complete contracting for Phase 1 during the third quarter of this year and start contracting for a significant portion of the expected Phase 2 volumes during the second half of the year.