CEO-newsarticle

CEF chief confirms PetroSA is moving on ‘downstream entry’

CEF CEO Sizwe Mncwango – who is also acting as interim chairperson of CEF‟s wholly owned subsidiary, PetroSA – has confirmed that the national oil company is prioritising a „downstream entry‟ and that its timeframe for meeting that objective is 2014 or 2015.

However, some observers have indicated that a deal could be imminent, with recent reports suggesting that PetroSA is in advanced negotiations with Malaysian oil group Petronas regarding the acquisition of its 80% interest in Engen. Speaking at a briefing hosted this week by the Department of Energy, Mncwango offered no specifics, but confirmed that it had, for some time, been investigating “various options for PetroSA‟s downstream entry”. He stressed that this was in line with a shareholder mandate to grow to the point of being a “strong energy participant and providing energy security”. Mncwango also said that all the projects currently being pursued by PetroSA remained “viable on a standalone basis” and that there were “a lot of suitors out there who would like to associate themselves with these kinds of programmes”.

Besides a possible downstream acquisition, he listed securing additional feedstock for PetroSA‟s gas-to-liquids (GTL) refinery in Mossel Bay as being a top priority. The immediate objective was to begin integrating gas from the FO offshore field into the GTL system. However, PetroSA was also working on a liquefied natural gas (LNG) import solution, which will bolster security of supply over the longer term.

PetroSA planned to make a final investment decision on a $375-million to $510-million LNG import facility in the fourth quarter of 2014, from which first gas could flow in early 2018. A more medium-term priority related to the development of the so-called Project Mthombo oil refinery, which is being studied for the Coega industrial development zone, in the Easter Cape.

The 300 000 bl/d crude refinery could involve an investment of between $9-billion and $11-billion and a full feasibility study into the project is about to begin and will be conducted jointly with PetroSA, Chinese petroleum and petrochemicals group, Sinopec, and the Industrial Development Corporation. The study is expected to be completed by the end of 2014. Mncwango indicated that the refinery could be developed in 2021/22, but that an investment decision would have to be made in 2017.

“The balance sheet of PetroSA has total assets of more than R30-billion so there are opportunities to do asset-based funding, leveraging that balance sheet and attracting external debt and equity,” he said.

27 September 2013

1 reply

Comments are closed.