Page 4 - DMEA Week 04 2023

DMEA COMMENTARY DMEA

PetroSA looks for GTL partners

amid downstream despair

The state oil firm is looking to alleviate its downstream

woes but is unlikely to do much for broader shortcomings

SOUTH AFRICA SOUTH African state oil firm PetroSA has PetroSA’s evaluation criteria are heavily
kicked off efforts to support the country’s strug- weighted towards state-owned or state-backed
gling downstream sector, seeking partners to companies, with at least $200mn of funding
WHAT: reinvigorate the moribund Mossel Bay gas-to- available. Meanwhile, IOCs with sufficient finan-
PetroSA liquids (GTL) plant. cial resources and access to feedstock will also
is looking for part- On January 18, the company issued a request be considered, albeit with a lower points allo-
ners to support ef- for proposals (RFP) “for development, refur- cation. In all cases, PetroSA will award a higher
forts to return its bishment, modification, upgrade, funding score for parties able to commit to a rapid project
Mossel Bay GTL and/or operation” of the facility, to reinstate implementation.
unit to full capacity. full production “in the earliest possible time at Feedstock supply cases under consideration
least costs”. Operations were halted in 2020 due by PetroSA include LNG supply, output from the
WHY: to feedstock challenges resulting from a sharp Block 11b/12b and condensate imports, while
South Africa’s fuel decline in local gas production. PetroSA’s RFP the RFP puzzlingly notes the potential construc-
imports are at re- notes that it is developing a ‘long-term feedstock tion of a 200,000 barrel per day (bpd) oil refinery,
cord highs and are solution’, which is expected allow full production presumably a legacy idea following years of stasis
showing no sign of from the asset by 2027/28. on plans to develop a greenfield unit under the
slowing down. Referring to the South African state-owned so-called ‘Project Mthombo’. The biofuels con-
Central Energy Fund (CEF), PetroSA noted its version case outlines plans to co-process bioal-
WHAT NEXT: shareholder’s “support of a partnership agree- cohols at a 12,000 bpd unit.
Revamping Mossel ment to accelerate production reinstatement and Considering the scoring mechanisms and
Bay will support optimise the operation in the short to medium plans, South Africa appears to be targeting major
PetroSA term.” gas exporters, and perhaps the most likely fit is
but is unlikely to Efforts to re-commission the 36,000 barrel QatarEnergy, which has shown a keen inter-
change the chal- per day (bpd) plant have come amid a record est in expanding its presence in sub-Saharan
lenging landscape increase in imported fuels in South Africa, fol- Africa and is already present in the South Afri-
for fuel availability lowing the shutdown – either temporary or per- can upstream, being part of the consortium that
in South Africa. manent – of several domestic refineries. made the Luiperd and Brulpadda gas/conden-
PetroSA said that the GTL plant could pro- sate discoveries in the Outeniqua Basin.
cess both gas and condensate, and that any
restart would require the operator to carry out An industry in turmoil
full shutdown and recertification. The company Having come under economic strain in the
mentioned that options were not limited to gas, past, refinery owners in South Africa have been
noting that it could be converted to process shutting down operations following the gov-
crude and condensate, or even conversion into ernment’s announcement of plans to mandate
a biorefinery. the use of ultra-low-sulphur gasoline and diesel
from 2023. It was anticipated that a move like
Finance that would require existing facilities to invest
The RFP noted PetroSA’s preference for a part- heavily just to keep the lights on.
ner that would fully fund the rehabilitation In 2020, the sector comprised four refineries
work, offering financial incentives based on the – two in Durban, one in Sasolburg and another
success of the project. Such incentives would in Cape Town – with a theoretical nameplate
take the form of sharing production revenue capacity of 507,000 bpd as well as the 160,000 bpd
and performance-based contracting or equity Secunda Coal-to-Liquids (CTL) plant, which
participation. utilises Sasol’s proprietary Fischer-Tropsch (FT)
Interested parties were given a deadline to technology, and Mossel Bay GTL.
respond by February 20. A further meeting with However, various factors have conspired to
the chosen parties discussing the details and significantly reduce usability and utilisation rates
scale of the plan is to be held on February 7. over the past two years.
PetroSA added that while it has significant A country overview by downstream-focused
expertise in GTL engineering, subsurface geol- consultancy Citac presented data suggesting that
ogy, geophysics and reservoir engineering dis- output from South African refineries had fallen
ciplines, partners will “have an opportunity to from 438,000 bpd in 2018 to around 240,000
interrogate the data during the business devel- bpd in 2021, with this figure seen dropping to
opment process.” just 219,000 bpd in 2022.

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