South Africa Partners with Gazprombank for Revival of Mossel Bay GTL Refinery

In a decisive move to secure the long-term viability of its domestic energy sector, South Africa has embraced a significant partnership with one of Russia's leading financial institutions. As announced by the government, Gazprombank Africa, a subsidiary of Russia's Gazprombank, has been selected as the investment partner to bring PetroSA's gas-to-liquid (GTL) refinery back to life.

Located in Mossel Bay, Western Cape, the GTL refinery ceased operation after its offshore gas supplies diminished to levels unable to sustain production. As the country's only producer of GTL products, PetroSA's Mossel Bay facility, with a production capacity of 45,000 barrels-per-day, has been under care and maintenance for several years.

With this new partnership, PetroSA is exploring avenues to revive its flagship plant. South Africa's need for a steady and secure supply of fuel was underscored after the unexpected shutdown of two major refineries, Sapref and Enref. These closures left the nation in an unsettling position regarding its energy security.

The partnership with Gazprombank, Russia's third-largest lender by assets, is still subject to a final investment decision, which will be based on a joint bankable business case. The cabinet statement has emphasized that everything hinges upon the final terms and conditions, which are anticipated to be concluded by April 2024.

In addition to the selection of Gazprombank as an investment partner, a crucial aspect of this strategic move is linked to ongoing negotiations with TotalEnergies. A massive gas discovery by TotalEnergies could result in a supply agreement that would utilize a PetroSA offshore platform. This existing platform, formerly servicing the Mossel Bay refinery, could serve as an essential conduit for the new gas supplies.

However, these negotiations have encountered stumbling blocks, particularly over the determination of gas prices. The outcome of these talks could significantly influence the future course of South Africa’s energy landscape.

If successful, rebooting the Mossel Bay plant with Russian investment could affirm South Africa's commitment to diversifying its energy mix while underlining the potential of the nation's existing infrastructure to contribute to its energy security. Ultimately, this move signals a robust effort by South Africa to regain control of its energy production capabilities and reduce vulnerability to externalities affecting fuel supply.