Tag Archive | offshore gas

Oil/sea gas debate re-started by Parliament

Parliament calls for public input on gas debate….

Roughnecks wrestle pipe on a True Company oil drilling rig outside WatfordOn the prospects of transforming the gas industry through partnerships, the parliamentary portfolio committee on energy has invited comments.  Recent presentations to the portfolio committee have led to a renewed belief that gas, whether found and transformed, offshore or onshore, needs more focus.

The background to the invitation for comment, which will have no doubt come from chair Sisi Njikelana, says, “Current development of regional gas-fields will lead to natural gas becoming a more important fuel source in South Africa. With the availability of natural gas in neighbouring countries, such as Mozambique, Namibia and Tanzania, and the additional discovery of offshore gas reserves in South Africa, the gas industry in South Africa is poised to undergo expansion.”

The notice continues, “ Natural and coal gas play separate roles in the energy system, with natural gas being used solely as a feedstock for the production of synthetic fuels, and coal gas as an industrial and domestic fuel.”

“The gas industry in South Africa is regulated by the Gas Act 48 of 2001, which is currently being revised. As part of the build up to discussing amendments to this Act, Parliament wishes to engage the public on the topic of “Prospects of transforming the gas industry through partnerships”.

“Sub topics (as part of the main theme) can include (but not limited to) finance, pricing, infrastructure development, procurement, technology research and development, key success factors, skills development and transfer, community involvement and expansion of the gas industry in South Africa.”

Public hearings are scheduled for 30 January 2014. Interested individuals, organisations and institutions wishing to comment were requested in the notice to forward written submissions to the Portfolio Committee have been asked to declare an interest in making an oral presentation to the portfolio committee itself if they so wish.

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Better year for PetroSA with offshore gas potential

In presenting their annual report and internal audit results to the portfolio committee on energy, PetroSA told parliamentarians that progress had been made on the Ikhwezi gas fields off the Mozambique coast and that four wells were originally drilled with two more recently completed, all resulting in a “sub-sea” pipeline to carry gas ashore from the platform created now being created.

The first actual operational well drilling is to be commenced by the end of 2012 and gas is expected to flow by 2013.   This should extend the life of Mossel Bay refinery to 2020.

CEO, Nosizwe-Nocawe Nokwe would not confirm the size or volumes involved in the Ikhwezi project -chairperson Sisa Njikelana reminding parliamentarians that PetroSA was working in a competitive market and certain facts, especially on crude oil and gas  matters, had to be withheld.

Nevertheless, she commented that PetroSA had received an “unqualified” audit opinion and generally things from a management perspective “were looking up”.

Ms Nokwe said that PetroSA’s activities in the downstream market were a “hive of activity” but from her presentations it had to be assumed by MPs attending that this was in the storage area and not in service station ownership.

When asked why PetroSA should be interested in such areas of expansion as “downstream”, as she referred to it, Nokwe replied that it was because “PetroSA had a vision of being a totally integrated oil and fuel supply company”.

A good number of the questions from MPs on the annual report surrounded the unsuccessful ventures to obtain crude oil in Equatorial Guinea where R1, 412m had to be written off in the year under review and in Egypt where R945m was also subject to a write off. The audit opinion was naturally highly critical of such ventures, referring to these as “impairments” but not “wasteful and unfruitful”, however, as was pointed out.

Also “significant uncertainties”, according to the internal audit, surrounding the sale of Brass Exploration Limited and PetroSA Nigeria (SOC) which Nosizwe Nokwe reported on as “ventures which were currently in process of litigation” and therefore, she felt, sub-judice as far as any debate was concerned.

Most of the problem with Brass Exploration had arisen because the investment was disallowable under the PFMA as the business was largely family-owned.

equitorial guinea

On further questioning by MPs, Ms Nokwe finally explained that the Equatorial Guinea venture was apparently on the basis that a partner, subject to certain conditions, had to be found in a specified period and as this had not happened, it was felt prudent to write off the exercise as the contractual arrangements appeared doomed. Nevertheless, in the last few days, such a partner has been located and the matter is being re-discussed.

The focus of PetroSA, said Nosizwe Nokwe, remained as sustaining the Mossel Bay GTL refinery and to develop Ikhwezi.   Group profits had risen 54% in the year under review. PetroSA was on the project group involved and supported the quest to ascertain the viability of shale gas in the Karoo.

Crude production figures for the group were given as 0.8 million barrels which was only 50% of target, the department of performance, monitoring and evaluation (DPME) had noted, which was disappointing as Ms Nokwe said, but the challenges at the production facility were now resolved.    Indigenous refinery production stood at 6.5m barrels for 2011/2.

Chief financial officer, Nkosemntu Nika, said that the small income involved was mostly generated from cash interests of the group but that a feature of the balance sheet was that it was debt-free. The crude oil market experienced some difficulties and resulted in a significant drop in storage rental income.

On the reasons for two recent trips to Venezuela and whether these had been “what might be termed as successful”, as put by the questioner, Ms Nokwe replied that indeed there had been two trips and like the Africa focus, the idea was to build relationships in markets not necessarily tied to old routine arrangements such as in the Middle East but to “forge new initiatives”.

No specific contracts or purchases were envisaged in the short term, she said, in view of the fact that Venezuela only had heavy crudes but there was no telling what could be done with a possible refinery at, say, Mathombo, Coega, she commented. SA refineries were geared to light oil requirements and Iran situation had clearly highlighted what the problems were ahead.

When asked about the possibility of PetroSA continuing with the objective defined as the Mathombo project, she said PetroSA needed a lot more support to start getting this “to the drawing board stage”. The country faced a real risk of fuel supply shortage, as stated in the PetroSA annual report, and also in the fuel energy reports contributed to by PetroSA in the past, but, like most, PetroSA awaited the results of IRP findings on energy supply requirements.

However, again she lobbied parliamentary support for a refinery at Coega.

The DG concluded that PetroSA was concerned on the declining feedstock picture and was working with Eskom on LNG development and alternatives.  The tanks at Saldanha Bay were discussed, but only to the extent that spare space could be taken up for rental on the basis of what would suit PetroSA.   As to their future, she said the Central Energy Fund should be asked, as they were studying the matter.

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