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Gazprombank Africa's Anticipated PetroSA Deal: Deadline Approaching as Mossel Bay Refinery Reboot Approaches

Published March 22, 2024
2 months ago

The upcoming deadline for Russia's Gazprombank Africa's proposal to revitalize PetroSA's gas-to-liquid (GTL) refinery in Mossel Bay is fast approaching— a major milestone that could see the refinery return to action after a period of care and maintenance since 2020. Amidst the challenges of dwindling gas supplies and the current geopolitical climate, South Africa's Mineral Resources and Energy Minister Gwede Mantashe announced on the parliamentary committee's perch that by the end of April 2023, an essential budget proposal from Gazprombank Africa is expected.

The cabinet's endorsement of Gazprombank Africa last December, despite ongoing sanctions related to Russia's foreign policy actions, underscores the importance South Africa places on job creation and energy stability. The restoration of the Mossel Bay refinery is earmarked to protect at least 2,000 jobs directly linked to the site, with a further 4,000 jobs potentially generated during construction phases, providing a substantial boost to local employment.

The estimated R3.7-billion investment in the project, while not without controversy, has been protected through diplomatic channels, assuring the shareholding's integrity through state-to-state agreements. This deal forms part of a larger strategy to revamp South Africa's gas sector, with PetroSA acting CEO Sesakho Magadla emphasizing the crucial role of reinstating production for energy sustainability.

With plans to increase the processing capacity from 18,000 to 46,000 barrels per day over three years, the facility not only aims to avoid anticipated gas shortages but also to link with significant offshore gas discoveries like those held by TotalEnergies in Block 9. This linkage could provide a much-needed buffer once Mozambican gas, currently supplied by Sasol, ceases to be available to large users.

Key to the partnership with Gazprombank Africa is the technical verification process, currently underway, funded entirely by the bank, which will streamline the terms and conditions of the final contract. Future operations anticipate a significant boost to infrastructure, including gas offloading efficiencies paralleling those of the Durban port, potential modifications to existing pipelines, and transportation enhancements for the road network supporting Mossel Bay and PetrolSA’s Bloemfontein depot.

However, the upcoming elections on May 29 pose a wildcard for the project, with the possibility of a shift in government and departmental structure potentially impacting the momentum created by the current administration. Nevertheless, the joint efforts by PetroSA and Gazprombank Africa in revitalizing Mossel Bay’s refinery signify a pivotal step towards energy self-reliance and economic stimulation for South Africa.

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