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AfrOil POLICY AfrOil

South Africa to merge state oil, gas firms

SOUTH AFRICA SOUTH Africa’s Cabinet approved a plan on development,” the Cabinet said last week.
June 11 to merge three state-owned oil and gas The government will appoint consultants to
firms to form a single national oil company handle the restructuring process. The new entity
(NOC), in an effort to curb losses. will be known as National Petroleum Co.
PetroSA, which operates the Mossel Bay gas- The Mossel Bay GTL plant is already oper-
to-liquids (GTL) plant and is involved in explo- ating well below its nameplate capacity of
ration and production, will be merged with gas 36,000 barrels per day (bpd). In its September
infrastructure developer iGas and the Strategic presentation to Parliament, CEF warned that
Fuel Fund (SFF), which manages South Africa’s PetroSA was close to negative cashflow as a
fuel reserves. All three are subsidiaries of the result of declining throughput. “Reserves are
state-owned Central Energy Fund. close to depletion and are expected to run out
Many of South Africa’s state-owned enter- by December 2020 and there is still no sustaina-
prises (SOEs) are lost-making, and in some cases ble techno-economic long-term solution for the
saddled with heavy debt. PetroSA had once been gas-to-liquid refinery,” the fund said.
a profitable enterprise, but has struggled with There are hopes that gas could be supplied to
dwindling supplies of domestic gas feedstock the plant from a major offshore discovery made
for its Mossel Bay plant. by Total in February last year. But the French
CEF warned in September last year that the major is still appraising the find, and is yet to
GTL refinery would run out of domestic sup- approve its development.
plies by the end of 2020. PetroSA reported a Ramaphosa has also called for changes at
net loss of ZAR2.08bn ($124mn) in the finan- power utility Eskom and South African Air-
cial year ending in 2019, while its debt rose to ways, blaming years of corruption and misman-
ZAR1.917bn. agement for their difficulties. Rather than being
South African President Cyril Ramaphosa merged, Eskom is due to be unbundled into
set out his plans for consolidation of the coun- three separate divisions. Its transmission activ-
try’s state sector in an address in February. The ities are expected to be spun off by the end of
aim is to “repurpose and rationalise a number of 2021, and its generation and distribution opera-
state-owned enterprises to support growth and tions the following year. ™

PROJECTS & COMPANIES
Dangote to inaugurate new $2bn urea unit

NIGERIA NIGERIAN industrial conglomerate Dangote The Indorama plant exports around 70%
will shortly inaugurate a new $2bn granulated of its production, while the rest is sold locally.
urea fertiliser plant in Lagos, it said on June 10. Notore’s production is mostly consumed
The plant has a production capacity of 3mn domestically.
tonnes per year (tpy), and uses gas supplies from Dangote’s new facility is anticipated to pro-
Nigerian Gas Co. and Chevron Nigeria as its vide around 25% of its urea for the domestic
feedstock. “The mechanical completion of the market and the rest for overseas. Traders who
fertiliser plant is over; the test phase is over; and spoke with ICIS expressed doubt that the plant
now we are in the commissioning phase,” Dan- would start operating on a commercial basis any
gote’s executive director for strategy, portfolio sooner than the end of the year. “Stability could
development and capital projects, Devakumar only come by December-January,” one trader
Edwin, told local press. said. “Initially, all new plants produce off-spec
The coronavirus (COVID-19) crisis will product and that takes time to stabilise.”
not affect progress at the project, Edwin said, “Realistically, we expect completion of
although the plant will not be ready to market the first Dangota line by the end of 2020; it is
its first products until 90 days after its power unlikely it will happen before,” another said.
turbines come online. The director did not say “Commercial output should be available in
when this was expected. the second quarter of 2021 or possibly the first
Nigeria already has two urea plants in opera- quarter.”
tion – the 1.4mn tpy Indorama unit at Port Har- Another company, Brass Fertiliser and Pet-
court and the 500,000 tpy Notore facility at the rochemical (BFPCL), plans to build a 1.3mn tpy
port of Onne. A second 1.6mn tpy train at Indo- urea faclity and 1.7mn tpy methanol plant in the
rama will come on stream in December 2020. state of Bayelsa. ™

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