After years of challenges, including a forced stoppage of operations at its gas-to-liquids refinery in Mossel Bay in 2020, PetroSA’s leadership says it is confident it can turn its operations and finances about.
The production of petrol, diesel and other value-added products from the refinery was suspended due to the depletion of offshore gas feedstocks. But as part of its short- and medium-term plans to prioritise downstream activities, PetroSA hopes to reinstate production from the refinery with the support of a new partner.
Acting PetroSA CEO Sandisiwe Ncemane said resuming production at the refinery would help to improve security of supply of petroleum products after the closure of several refineries over the past few years, which made SA more reliant on imports.
PetroSA issued a request for proposals in January to partners that could provide feedstock supply solutions and help develop upstream assets that will generate revenue for the company.
One of the main objectives is to find a partner or partners to assist PetroSA in commercially monetising the remaining gas potential in the Block 9 off the coast of Mossel Bay, the main supply source for gas to the refinery.
Ncemane told Business Day their immediate priority is to “stabilise the organisation”. This will include concluding the process of appointing new partners, and having a confirmed partner by end-March 2024, which is the end of their current financial year.
“Through the partnership strategy we want to unlock feedstock from the block where we already have infrastructure in place (block 9) towards the reinstatement of the refinery
“From there the outlook is to reinstate the refinery in a phased way within 18 months to 24 months,” she said.
Before its closure, the refinery was running at a 36,000 barrel-per-day capacity. Ncemane said that with refining capacity being reduced in the country they want to increase volumes from PetroSA to address security of supply.
“Whether that will be exclusively from the refinery at Mossel Bay or a cluster of refineries still needs to be determined.”
PetroSA also continues to engage with the consortium developing blocks 11 and 12 (located offshore from the Southern Cape coast), led by TotalEnergies, on how gas from these blocks can tie into the Petro SA medium- and long-term strategy, she said.
The company has also set its sights on feeding electricity into the grid from a gas-to-power development. The facility, said Ncemane, can be powered through the recovery of otherwise stranded tail gas from its Mossel Bay operations.
The tail gas is suitable to drive a small gas-to-power plant that can generate 20MW-180MW power to feed into the grid.
Tail gas will be available for up to three years from as early as 2025, from current supply, to drive a small-scale power facility. But with additional production from block 9 the time frame could be extended by about 10 years.
Ncemane said they will take some of the lessons learnt from recent experience to make sure they select the Right partners for future projects.
She was referring to PetroSA’s experiences with Project Mthombo, a multibillion-rand oil refinery that was to be built at the Coega Special Economic Zone in Gqeberha.
According to a City Press report, PetroSA and the Eastern Cape provincial government spent nearly R200m on the refinery project since about 2007, but it did not materialise. Much of the money for the project, which PetroSA was developing jointly with Chinese oil company Sinopec, was spent on legal advisory and prefeasibility studies.
“It is important to reflect on past experiencing, what worked. The kind of partner that we bring on board as we focus on reinstating the refinery in Mossel Bay needs to be clear about the value proposition they bring on board. The request for proposals was quite explicit in this — the partner must bring technical expertise and they must be able to assist in funding this initiative,” said Ncemane.
PetroSA said in its request for proposals that it would give preference to partners who offered proposals for turnkey solutions, including development and funding; proposals that are immediately implementable.
In addition, it would give preference to “state-owned or state-supported oil and gas entities from oil and gas-producing nations with access to feedstock and their own financial resources to undertake the project”.
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