South African government approves controversial gas refinery deal with Russia

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  • Cabinet has approved state-owned company Petro SA’s recommendation of GazpromBank Africa as an investment partner for the reinstatement of the Mossel Bay Gas to Liquids (GTL) refinery plant and production. 
  • This according to Minister in the Presidency Khumbudzo Ntshavheni who was speaking during a post-cabinet media briefing on Monday.

Ntshavheni highlighted that the refinery is one of the “critical components of PetroSA’s turnaround strategy. Cabinet was updated about the process followed by CEF to source partners with requisite technical and financial resources to support PetroSA in bringing the refinery back to full operation. The preferred partner would share in the risk and rewards of reinstatement of the refinery. Cabinet endorsed PetroSA’s recommendation to select GazpromBank Africa as the investment partner for the re-instatement of the plant and production. Cabinet noted that this selection of GazpromBank is still dependent on the Final Investment Decision that will be informed by a joint bankable business case, as well as all the terms and conditions, which are anticipated to be finalised in April 2024,” said Ntshavheni.

Related news: The deal saw 19 out of 20 bidders being eliminated on technical grounds, leaving Gazprombank as the only qualifying bidder 

Ntshavheni said the reinstatement of the refinery has the potential to provide jobs on site. “The refinery reinstatement has a potential to retain at least 2000 direct site jobs, with an additional potential fixed term employment opportunities for 4000 jobs during the construction phase,” she said.

According to Petro SA’s Request for Proposal released earlier this year, the refinery has not been in operation since 2020.

“PetroSA is planning to reinstate to full production level its Mossel Bay Production Assets which includes the FA Platform and GTL-Refinery (Gas Loop and Liquids Refinery) in the earliest possible time at least costs following suspension of production in 2020 due to feedstock challenges.

“The Mosselbay Refinery has capability to process both Gas and Condensate. There is a long-term feedstock solution that is under development which is expected to supply feedstock to enable full production capacity as of 2027/2028. This solution is most likely to affect the FA Platform and Gas Loop Section.

“The condensate section could be decoupled from this long-term solution thus ensuring uninterrupted production. The Shareholder is in support of a Partnership agreement to accelerate production reinstatement and optimise the operation in the short to medium term,” the company said.

Author: Bryan Groenendaal

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