South Africa’s PetroSA has announced that it aims to make a final investment decision (FID) by April, which will support restarting production at the Mossel Bay gas-to-liquids (GTL) refinery.
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This decision comes after Cabinet approval for PetroSA to partner with Russia’s Gazprombank Africa in December last year.
The GTL refinery, which is valued at $2.85 billion, stopped operations in 2020 due to the $1 billion Project Ikhwezi’s failure.
More recently, PetroSA acting CEO Sandisiwe Ncemane argued that the resumption of production would support fuel security in the Eastern, Northern and Western Cape provinces.
The company briefed the Cabinet on finding a partner for the refinery’s revival during a special meeting in December.
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As per Engineering News, the company sought proposals last January and chose GazpromBank Africa, despite concerns over US and EU sanctions on Russia. During the selection process, all 20 companies except Gazprombank Africa that submitted bids were disqualified.
Cabinet spokesperson Khumbudzo Ntshavheni dismissed worries about sanctions, pointing to exemptions and ongoing energy trade with Russian firms by other countries.
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PetroSA acting COO Sesakho Magadla says the company obtained an independent legal opinion that indicated a low sanction risk, emphasising the project’s alignment with ‘critical energy security’. ‘This project falls within that description because it is also critical for South Africa’s energy security.’
The company acknowledged potential impacts on its partnership with TotalEnergies but stressed urgency due to slow progress on other projects. ‘We cannot be sitting idle and waiting for 2030 while our plant is rotting,’ says Magadla.
Ntshavheni says the partnership with Gazprombank Africa is dependent on the FID, which will be informed of the outcome of a joint bankable business case.
However, the company is optimistic that it will reach an FID to the tune of R3.7 billion with Gazprombank Africa during the first quarter of this year and close its finances by the second quarter, after which an 18-month engineering and construction period will commence.
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