Name and Location
Project Ikhwezi, Western Cape, South Africa.

Client
PetroSA.

Project Description
Project Ikhwezi forms part of the national oil company’s plan to secure additional reserves to sustain its Mossel Bay gas-to-liquids refinery, Mossgas, which is its main revenue earner.

Further development of other gas prospects near the F-O field could potentially assist in sustaining the life of the GTL refinery until 2025. The wells are located off the F-O field, in Block 9, 40 km south-east of the offshore F-A production platform.

Value
$1-billion.

Duration
The PetroSA board made a final investment decision to embark on the project in April 2011, followed by environmental authorisation in November. It applied for approval from the National Energy Regulator of South Africa in December. Production of the gas from the first well is planned for the final quarter of 2013 and PetroSA estimates that production will continue for about six years.

Latest Developments
The Department of Mineral Resources (DMR) has confirmed that it has received an appeal from black economic-empowerment (BEE) firm Zululand Oil & Gas Resources against the granting of PetroSA’s Ikhwezi production right, off the south coast of South Africa.

PetroSA was granted a production right for Ikhwezi in November last year.

Zululand lodged an appeal in December, citing the alleged noncompliance with Section 84 of the Mineral and Petroleum Resources Development Act, which states that the granting of a right should substantially and meaningfully expand opportunities for historically disadvantaged persons, including women, to enter the mineral and petroleum industries.

Zululand, which applied for a participation opportunity through an expression of interest in the F-O tract in 2006, believes that PetroSA had to select a BEE partner before it could be granted a production right, but PetroSA spokesperson Thabo Mabaso disagrees.

According to Zululand chairperson Ebrahim Sayed PetroSA has not advertised for a BEE partner to date.

“PetroSA will fulfil its obligations contained in the production rights for the block, which may include an open and transparent process of engaging potential BEE partners,” says Mabaso.

Mabaso adds that, should PetroSA advertise for a BEE partner, it will be done after production has started.

PetroSA has also denied that it has any commercial relationship, or has made a promise of one, with Zululand. “The only agreements between Zululand Oil & Gas and PetroSA are confidentiality agreements, in which Zululand has certain obligations, including holding PetroSA’s information confidential,” he says.

“We had various agreements with them during the exploration phase in Block 9, in the F-O field, where we were given the information [commercial, financial and technical] we needed to raise capital to buy into the development and production phase,” says Sayed, adding that the company raised R1.2-billion to buy into the project.

DMR spokesperson Trevor Hattingh told Engineering News Online that the case was getting the necessary attention and that the appeal authority would make a decision soon.

Key Contracts and Suppliers
Ensco (drilling contract), Allseas (subsea pipeline) and SBM (subsea infrastructure).

On Budget and on Time?
Production at Ikhwezi has been delayed to the final quarter of 2013, from the original starting date in May, owing to early challenges with the drilling rig and delayed delivery times of specialist proprietary equipment from Europe and the US.

Contact Details for Project Information
PetroSA, tel +27 21 929 3000, fax +27 21 929 3144 or email petrosa@petrosa.co.za.
Ensco, tel +44 207 659 4660.