Pe­troSA in de­al with Rus­sia

Mossel Bay Advertiser - - Voorblad - Nic­key le Roux

An agreement strongly re­po­si­ti­o­ning Pe­troSA to­wards gro­wth was t­his week sig­ned be­t­ween Pe­troSA and a Rus­si­an ge­o­lo­gi­cal ex­plo­ra­ti­on com­pa­ny, Ros­geo and it is ex­pected to bring oil and gas de­ve­lop­ment of a­bout $400m (R5.2bn) to South A­fri­ca. The pro­jected ex­tracti­on of up to four mil­li­on cu­bic me­tres of gas dai­ly from blocks 9 and 11a off the Ca­pe South Co­ast will be­ne­fit the Pe­troSA Gas-To-Li­quid re­fi­ne­ry in Mos­sel Bay.

Pe­troSA, the Oil and Gas Cor­po­ra­ti­on of South A­fri­ca, and Ros­geo, the ge­o­lo­gi­cal ex­plo­ra­ti­on com­pa­ny of the Rus­si­an Fe­de­ra­ti­on, t­his week sig­ned an agreement that will see a­bout US$400 Mil­li­on in­ves­ted in oil and gas de­ve­lop­ment.

The agreement was sig­ned in the pre­sen­ce of mi­nis­ters of e­ner­gy at the n­inth An­nu­al B­ri­cs Sum­mit cur­rent­ly un­der way in Xi­a­men, Pe­op­les Re­pu­blic of C­hi­na.

The agreement in­vol­ves the de­ve­lop­ment in the ex­plo­ra­ti­on a­re­as of blocks 9 and 11a off the South Co­ast of South A­fri­ca.

“Finds in block 9 and 11a would re­sult in much-de­si­red ex­plo­ra­ti­on acti­vi­ty of our on­sho­re and offs­ho­re oil and gas po­ten­ti­al. The coun­try and Pe­troSA will be­ne­fit gre­at­ly from the find. From the per­specti­ve of Pe­troSA it will re­sult in che­a­per feed in­to the Mos­sel Bay re­fi­ne­ry,” Nhlanhla Gu­me­de, Pe­troSA’s In­te­rim chair said.

Block 9 falls in the so-cal­led B­re­das­dorp ba­sin, w­he­re the FA gas field and Pe­troSA’s O­ri­bi and Oryx oil fields are lo­ca­ted. It is in t­his block that the con­tro­ver­si­al I­kwe­zi pro­ject, which led to ma­jor fi­nan­ci­al los­ses of mo­re than R14bn in the last fi­nan­ci­al y­e­ar for Pe­troSA, was exe­cu­ted.

Block 11a, on the ot­her hand, is a con­si­de­ra­bly smal­ler ex­plo­ra­ti­on a­rea south of the T­sitsi­kam­ma co­ast.

Much ho­pe is cen­tred on the agreement with Ros­geo as a­vai­la­ble gas re­ser­ves are dwind­ling. At the par­li­a­men­ta­ry port­fo­lio com­mit­tee’s o­ver­sig­ht vi­sit at Pe­troSA’s gas­to-li­quid (GTL) Re­fi­ne­ry in Mos­sel Bay on Tu­es­day, 27 Ju­ne to re­cei­ve a re­port from the Cen­tral E­ner­gy Fund (CEF) on the tur­na­round stra­tegy for Pe­troSA, par­li­a­men­ta­ri­ans we­re told that if new gas sour­ces we­re not found, the al­ter­na­ti­ve would be to im­port na­tu­ral gas, or to con­vert the cur­rent plant in­to a re­fi­ne­ry.

At t­his meet­ing it was said Pe­troSA was em­bar­king on a tur­na­round stra­tegy as the­re we­re less than three y­e­ars left of the pre­sent gas re­ser­ves, ne­ces­si­ta­ting a chan­ge in the cur­rent bu­si­ness mo­del from a gas-to-li­quid (GTL) re­fi­ne­ry, to pro­ces­sing cru­de oil.

T­his pro­cess is, ho­we­ver, re­sulting in far gre­a­ter ex­pen­ses to the com­pa­ny in terms of in­put cos­ts.

Ear­lier ho­pes of buil­ding an LNG (li­que­fied na­tu­ral gas) lan­ding fa­ci­li­ty ne­ar V­lees­baai we­re das­hed due to sea con­di­ti­ons being dee­med as too rough.

Ex­plo­ra­ti­on

Wi­thin the fra­me­work of the agreement, Ros­geo is sup­po­sed to con­duct a con­si­de­ra­ble vo­lu­me of ge­o­lo­gi­cal ex­plo­ra­ti­on work. In par­ti­cu­lar, it is plan­ned to car­ry out mo­re than 4 000 squa­re km of 3D seis­mic o­pe­ra­ti­ons and o­ver 13 000km of gra­vi­ty-mag­ne­tic ex­plo­ra­ti­on works, as well as the dril­ling of ex­plo­ra­to­ry wells. The es­ti­ma­ted vo­lu­me of the in­ves­t­ment is a­bout US$400 mil­li­on.

The pro­ject en­visa­ges ex­tracti­on of up to 4 mil­li­on cu­bic me­tres of gas dai­ly. T­his will sub­se­quent­ly be de­li­ver­ed to Pe­troSA’s Gas-ToLi­quids re­fi­ne­ry in Mos­sel Bay.

Ro­man Pa­nov, the CEO of Ros­geo, Lu­vo Ma­ka­si, the chair­man of the Cen­tral E­ner­gy Fund, and Nhlanhla Gu­me­de, Pe­troSA’s In­te­rim C­hai­r­per­son, sig­ned the agreement.

Pa­nov stres­sed that wi­thin the fra­me­work of the con­tract Ros­geo would use ad­van­ced techno­lo­gies, in­clu­ding 3D ex­plo­ra­to­ry works, and mo­dern seis­mic and dril­ling ves­sels.

‘Finds in block 9 and 11a would re­sult in much-de­si­red ex­plo­ra­ti­on acti­vi­ty of our on­sho­re and offs­ho­re oil and gas po­ten­ti­al.’

S­tra­te­gic se­arch for oil

“The sig­ned agreement is ai­med at de­ve­lo­ping bi­la­te­ral re­la­ti­ons and will streng­then Ros­geo’s pre­sen­ce in the A­fri­can mar­ket,” he said.

Ma­ka­si said the se­arch for oil and gas re­sour­ces in South A­fri­ca re­mai­ned s­tra­te­gic for the coun­try’s e­ner­gy se­cu­ri­ty and was ex­tre­me­ly im­por­tant to Pe­troSA’s con­ti­nu­ed and sus­tai­na­ble sur­vi­val.

“South A­fri­ca’s oil and gas po­ten­ti­al re­mains lar­ge­ly u­nex­plo­red. T­his ex­plo­ra­ti­on ef­fort pre­sents a sig­ni­fi­cant upsi­de to both the coun­try and Pe­troSA. The upsi­de for Pe­troSA is the pos­si­ble ex­pan­si­on of our de­ple­ting gas re­sour­ces. Dis­co­ve­ry of hyd­ro­car­bons on our sho­res has the po­ten­ti­al to bring sig­ni­fi­cant re­ve­nues to the coun­try and pro­ve the coun­try’s oil and gas pro­specti­vi­ty,” he ad­ded.

The Pe­troSA in­te­rim bo­ard chair said the agreement re­pre­sen­ted a sig­ni­fi­cant de­ve­lop­ment to­wards buil­ding a new s­tra­te­gic thrust for the com­pa­ny. He ad­ded that the agreement was strongly re­po­si­ti­o­ning Pe­troSA to­wards gro­wth.

Con­tro­ver­sy

Ac­cor­ding to Dai­ly Ma­ve­rick (dai­lyma­ve­rick.co.za) the de­al, se­ver­al y­e­ars in the ma­king, re­cent­ly s­par­ked con­tro­ver­sy w­hen claims of po­li­ti­cal medd­ling e­mer­ged through court pro­cee­dings. The si­te sta­tes: “Dai­ly Ma­ve­rick pre­vi­ous­ly re­por­ted on claims by two for­mer Pe­troSA bo­ard mem­bers that their re­mo­val from the bo­ard was al­le­ge­d­ly due to a tus­sle a­bout t­his lu­cra­ti­ve de­al. Wil­li­am S­teen­kamp and O­wen To­bi­as broug­ht an ur­gent High Court ap­pli­ca­ti­on last week in a bid to chal­len­ge their re­mo­val.”

Cen­tral E­ner­gy Fund (CEF) chair­man Lu­vo Ma­ka­si has sin­ce re­fu­ted the­se claims. Re­spon­ding on Mon­day from C­hi­na to que­s­ti­ons a­bout the mat­ter, Ma­ka­si said the re­mo­val of the pre­vi­ous Pe­troSA bo­ard was not re­la­ted to the Ros­geo mat­ter, as he had sta­ted in his re­spon­ding af­fi­da­vit. “Mo­re so, the mat­ter which is al­le­ged to be the re­a­son the­re­of [the bo­ard re­mo­val] had ne­ver been broug­ht by the pre­vi­ous bo­ard to our at­ten­ti­on as the CEF bo­ard and thus no re­fe­ren­ce is ma­de to it in any cor­re­spon­den­ce be­t­ween the CEF bo­ard and the pre­vi­ous Pe­troSA bo­ard, thus it could not ha­ve been the re­a­son for the dis­agreement,” Ma­ka­si is quo­ted to ha­ve said to Bu­si­ness Day.

Ac­cor­ding to an agreement sig­ned with a Rus­si­an com­pa­ny for ge­o­lo­gi­cal ex­plo­ra­ti­on, Mos­sel Bay’s Pe­troSA plant will be­ne­fit from the pro­jected ex­tracti­on of up to four mil­li­on cu­bic me­tres of gas dai­ly from blocks 9 and 11a off the Ca­pe South Co­ast.

Block 9 falls in the so-cal­led B­re­das­dorp ba­sin, w­he­re the FA gas field and Pe­troSA’s O­ri­bi and Oryx oil fields are lo­ca­ted. Block 11a is a con­si­de­ra­bly smal­ler ex­plo­ra­ti­on a­rea south of the T­sitsi­kam­ma co­ast.

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