Western Cape Business News

Send  Share  RSS  Twitter  10 Jan 2011

POWER SUPPLY: New South Coast Gas Scenario


Recent Western Cape Business News

IN its latest bulletin to members, the Cape Chamber of Commerce has drawn attention to a number of developments in the oil and gas industry that have failed to gain the attention of the media but which are nevertheless significant, especially for the Western Cape.

PetroSA, the company that runs the Mossgas Gas-to-Liquid refinery, has reported a major gas find off the South Coast and this could have a far-reaching effect on the local oil and gas industry.

The find, which is estimated at one trillion cubic feet but could be as much as two or three TCF’s, is sufficient to justify a R1billion project to bring the gas ashore. The chamber was told at an earlier presentation by the Petroleum Agency of SA, the organisation responsible oil and gas exploration, that one TCF was enough to keep the Mossgas refinery in business for 14 years.

The discovery comes at a time when the indications were that Mossgas would have to import natural gas to feed the refinery.

As a result of the discovery, PetroSA might have to do some major re-thinking. At present it is looking for finance for the $9 billion (about R63 billion) refinery at Coega which would produce 400 000 barrels a day from imported crude oil, probably from Venezuela.

This project has been strongly criticised because it is so far from the main market in Gauteng and would require a pipeline twice the length of the new R15.4 billion Transnet pipe from Richards Bay to Gauteng.

At present PetroSA is talking to China about the refinery.

In the meantime there are other significant developments but nobody seems to be joining the dots together. Mozambique is planning a 350 000-barrel-a-day refinery to process its own oil and to export 95% of the refined product.

The Mozambique refinery will be much closer to the Gauteng market than the Coega plant and there is already a gas pipeline from Mozambique.

Complicating matters further is an upheaval within PetroSA. Recently three top executives were suspended and then re-instated. Last month the CEO Sipho Mkhize was fired after a disciplinary hearing. No details were released.

A new CEO will have to take stock of the situation in PetroSA and he (or she) could well decide that the new gas find is more than enough to keep the State-Owned Enterprise busy for the foreseeable future.

The new South Coast gas discovery also puts paid to plans to pipe gas from the West Coast gas field to Mossel Bay. This means that West Coast gas should all be available for the Western Cape.

All this is happening at a time when major players in the global oil and gas industry have secured licences for exploration in the promising areas off the West Coast and for shale gas in the Karoo.


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