Serious questions are being asked about the future of PetroSA, the loss-making Central Energy Fund’s biggest subsidiary that has as its main task the operation of the Mossel Bay gas-to-liquids plant, which has been shut for two years.
SERIOUS questions are being asked about the future of PetroSA, the loss-making Central Energy Fund (CEF)’s biggest subsidiary that has as its main task the operation of the Mossel Bay gas-to-liquids (GTL) plant, which has been shut for two years.
The Mossel Bay GTL plant was put on “care and maintenance” in November 2020, after the offshore gas reserves were depleted.
PetroSA also manages a 3% stake in an oilfield offshore of Ghana, and has begun importing petrol and diesel, as the other major oil industry groups have done, following the closure of most of SA’s refinery capacity, though Astron has indicated its refinery in Milnerton may open by the end of the year.
PetroSA acting chief executive Sandisiwe Ncemane said in a News 24 report that the volume of gas imports that South Africa was experiencing had “highlighted a bottleneck crisis in refinery capacity”. The CEF did not respond to further media questions at the time of going to publication.
A well-placed oil industry source said the problem with PetroSA’s current petrol and diesel imports was they were erratic and irregular. For example, for several months it only imported petrol, while for other months it only imported diesel. The source said that while PetroSA was inefficient in its fuels trading, its long-term future was a political decision as the company was part of the government’s strategic oil industry assets.
The CEF said in its 2020/21 annual report: “The sustainability of PetroSA still remains a critical delivery of the CEF Group Corporate Plan. The entity is technically insolvent and will require serious intervention. CEF SOC will provide oversight in ensuring that PetroSA delivers on the key initiatives that have been identified for the organisation (turn)around, and dealing decisively with poor performance. Key among these are cost optimisation, affordable feedstock sourcing and GTL operations resumption.”
DA energy affairs spokesperson Kevin Mileham said in a telephone interview that while PetroSA kept referring to the Bulpadda and Luiperd gas discoveries offshore of the southern Cape as a possible solution for the Mossgas plant, TotalEnergies, which made the discoveries, had indicated that, even if there were sufficient reserves, the earliest it could bring the wells to production was in seven to eight years.
According to other reports, the Brulpadda discovery was found in 2019, but a final decision to invest is only expected in 2024.
The government had not been successful in obtaining other sources of commercially viable gas for the Mossgas plant and PetroSA was, consequently, not making any progress in its turnaround plan, said Mileham.
He said the Mossgas plant not only needed gas, but also substantial maintenance and upgrades since its closure, all of which raised the question of whether PetroSA’s ongoing losses should be supported by the government, said Mileham.
The CEF, in its financial year to March 31, 2021, reported reduced revenue of R10.36 billion, and its net loss came to R540.2 million. Some 47 percent of the group’s R29 billion of assets was in cash, mostly in the money market.
– BUSINESS REPORT
