LARGE natural gas discoveries off the coast of Mozambique have put the former Portuguese colony in the spotlight, as major international energy companies such as US-listed Anadarko Petroleum and Italian oil and gas multinational Eni are hitting huge gas reserves.
South African multinational Sasol has, on several occasions, demonstrated why the gas discoveries are a big deal for its gas-fuelled growth strategy. Its initiatives in Mozambique include the expanded natural gas central processing facility in Temane. Sasol says it plans to develop additional gas-fired electricity generation in Mozambique, in partnership with the country’s state-owned power utility, Electricidade de Moçambique, at Ressano Garcia.
National oil company PetroSA, on the other hand, must be kicking itself for getting left behind in the hunt for gas.
Mozambique’s proximity to SA means that the gas fields are like manna from heaven for PetroSA, which has a gas-to-liquids refinery in Mossel Bay. The biggest risk it faces at the moment is dwindling gas supplies for the plant.
The gas revolution in Mozambique gives PetroSA options as far as supplies are concerned. CE Nosizwe Nocawe Nokwe says the natural gas discoveries in Mozambique mean PetroSA can access feedstock for the Mossel Bay gas-to-liquids plant "at reasonable prices".
PetroSA spokesman Kaizer Nyatsumba says the company is catching up. It has already penned a "co-operation agreement" with its Mozambique counterpart, PetroMoc, and wants to jointly develop and operate a gas-to-liquids refinery in Mozambique.
Ms Nokwe says PetroSA’s priority is to keep the Mossel Bay refinery, the company’s main revenue driver, running.
At the moment, PetroSA’s hopes for long-term feedstock solutions for the refinery hinge on the successful production of gas from its South African offshore gas field as part of Project Ikhwezi.
The f irst gas is expected by the middle of next year. The drilling operation of the five Project Ikhwezi wells is scheduled to start in November and to be completed by the second quarter of 2015, according to PetroSA. The project recently got a boost when the National Energy Regulator of SA gave it regulatory approval.
The relationship with PetroMoc could also see PetroSA realise its dream to be a player in the downstream sector of the petroleum industry. Moving from being a wholesaler to a retailer of petroleum products will open a new revenue stream and is in line with its strategy to become a fully integrated, commercially competitive national oil company, supplying at least 25% of SA’s liquid fuel needs by 2020.
Ms Nokwe says the recent acquisition of BP’s petroleum storage facilities in Tzaneen and Bloemfontein is part of the plan to enter the downstream market.
Shortly after the purchase of the storage facilities in May, Ms Nokwe said: "PetroSA has the ambition of being the leading African energy company. This begins with firming up our foothold in SA and establishing our presence beyond the Western Cape."
Entry into the downstream market means that, in some instances, PetroSA will sell directly to customers, instead of resellers.
The decision by oil multinationals to divest from certain downstream activities presents PetroSA with growth opportunities. Ms Nokwe says it will consider buying existing assets.
At face value, PetroSA’s target to supply 25% of SA’s fuel needs by 2020 seems overly ambitious. But it is important to remember that anyone planning to build a giant crude oil refinery which, when fully commissioned, will churn out massive volumes of refined petroleum products, would be as confident.
PetroSA has said that the size and cost of the refinery are yet to be finalised. These will be determined by the recent joint study agreement it signed with Chinese oil and gas group Sinopec. The costs of the refinery, also known as Project Mthombo, have previously been estimated at $9bn, with a capacity of 360000 barrels a day.
Source: Business Day
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