PetroSA may run out of domestic supplies by the end of next year
South Africa’s national oil company PetroSA is facing an ongoing crisis, with concerns that its Mossel Bay gas-to-liquids (GTL) refinery may run out of domestic supplies by the end of next year.
“Reserves are close to depletion and are expected to run out by December 2020 and there is still no sustainable techno-economic long-term solution for the gas-to-liquid refinery,” a presentation by the Central Energy Fund to Parliament’s Portfolio Committees on Mineral Resources and Energy, has showed.
The committee heard that PetroSA, which owns one of the world’s largest GTL refineries, was facing various challenges, including the high cost of imported condensate, high fixed cost structure and leadership instability. The entity has been operating with an acting CEO and CFO since 2014.
“Indigenous gas is to fall below the commercial limit of the GTL refinery by December 2020,” the presentation said.
The entity’s refinery emergency plan includes stabilizing the refinery operation, partly by getting the right people with the right competencies in the right positions and to reduce levels of management and costs.
The presentation conceded that PetroSA is close to negative cashflows, which had made it unable to fund its long term plans and increased its cost of doing business
The CEF said the group had a "very low brand equity" which has emerged from "prolonged negative media coverage" of the 2015 illegal sale of the national strategic fuel stock, the 2014/15 impairment of the Ikhwezi project investment and wrong perceptions about the South Sudan deal.
PetroSA announced in February that it had been in touch with oil major Total, following the discovery of an offshore field containing gas condensate that could potentially be used as feedstock to Mossel Bay.
The last time PetroSA drilled was on the Ikhwezi project in 2014.
Some MPs also expressed concern about the exploration and production sharing agreement concluded between the governments of South Africa and South Sudan in 2019 to jointly pursue oil and gas opportunities in South Sudan’s oil and gas sector, describing it as "risky".
Other MPs expressed concern that the gender balance was heavily skewed towards men in PetroSA, with women making up only 27% of the workforce.
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