Mossel Bay GTL plant. Picture credit: georgeherald.com

Business In The News South Africa

South Africa says refinery can run out of natural gas in 2 years

Cape Town, June 12 – South Africa’s flagship gas-to-liquids (GTL) refinery at Mossel Bay could run out of natural gas within two years when offshore reserves dry up, a senior energy official said on Tuesday.

Luvo Makasi, Chairman of the Central Energy Fund’s board, said in Cape Town that the refinery was in a position where between 2020 and 2022 it may not have any gas available.

The Mossel Bay GTL plant, one of the world’s largest, is operated by state-owned national oil and Gas Company PetroSA, a subsidiary of the government’s Central Energy Fund.

Makasi said the Fund was looking to source feedstock elsewhere but did not provide any details, after PetroSA failed to secure additional gas reserves in a one billion dollars offshore drilling campaign.

Besides the financial hit PetroSA took from its drilling campaign, Makasi said it also faced a massive decommissioning bill which could threaten its financial stability.

“That liability is estimated to be about 9.6 billion rand (729 million dollars),” he said.

The drilling campaign, which was discontinued after poor results, was stopped after it found only 25 billion cubic feet (bcf) of gas could be commercially extracted, compared to the 242 bcf of gas that was expected to be found.

The Mossel Bay plant, located on the south coast, accounts for around six per cent of South Africa’s refining capacity but is operating at less than half of its capacity of 45,000 barrels per day of oil equivalent due to dwindling reserves.

Shell, BP, Total, Sasol and Engen are among operators of oil refineries in South Africa, which depends on imports to meet rising demand for refined petroleum products. (Reuters)

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