Maputo — The Mozambican government and the South African petro-chemical company Sasol on Friday signed three agreements on the exploitation of the natural gas deposits at Temane and Pande in the southern province of Inhambane.

The documents concern the sale of the gas, the joint operation of the gas pipeline, and a shareholder contract for the pipeline.

Normally such agreements would have to be signed before the project could start - but in this case, 300 kilometres of the 865 kilometre long pipeline has already been laid. The finance for this has been provided out of Sasol's own funds, rather than from bank loans.

Mozambique's Minister of Mineral Resources and Energy, Castigo Langa, told reporters "Under normal conditions, if we were dealing with a company that does not have the same financial conditions as Sasol, we would have had to wait until all these agreements were signed in order to reach financial closure - that is, the moment when banks can disburse funds for the project".

"But given its own financial situation, Sasol did not wait for the banks", Langa continued. "It has been paying for the project with its own money. Now that these commercial agreements are concluded, there are guarantees that banks will feel comfortable about putting money into the project".

The Sasol executive director, Pat Davies, described the natural gas project as a "historic initiative for regional development", which would improve the lives of people in both South Africa and Mozambique.

"It's a good start to a long relationship that will last at least 25 years", he said.