Oil and gas

Chevron deal means investment for Cape refinery.

South Africa’s Competition Tribunal ruled in 2018 favour of a South African group acquiring the majority share of Chevron SA. Off the Shelf Investments 56 becomes the first majority black-owned oil company in South Africa.

Among the conditions imposed by the tribunal are that R6-billion must be invested in the Western Cape refinery and that jobs must be preserved.

A Hong Kong-based company had earlier been given the green light by the tribunal but Off the Shelf, as an empowerment partner of Chevron SA (and resources giant Glencore), had right of first refusal. In addition to the 110 000 barrel a day refinery, Chevron controls 820 petrol stations, oil storage facilities and a lubricants plant.

The Western Cape Provincial Government reported that in 2016 the oil and gas sector contributed R1.03-billion to the province’s gross value add. More than 7 000 direct jobs were created in ship and rig repair sector of the oil and gas business in 2015. The oil and gas sector is a priority sector and as such, falls under Project Khulisa. This entails logging detailed plans with progress reports going to the Premier on a regular basis.

The Saldanha Bay Industrial Development Zone is central to the plan to grow the oil and gas sectors. Large industrial operations already exist at Saldanha and the Port of Saldanha Bay is the portal for the export of South Africa’s iron ore.

The Western Cape Provincial Government and the National Department of Trade and Industry have so far invested R500-million

SECTOR INSIGHT

R500-million has been spent on infrastructure at Saldanha Bay.

in the development of core infrastructure at the Saldanha Bay IDZ. The Saldanha Bay IDZ has signed a lease agreement with the Transnet National Ports Authority.

The Western Cape’s status as an oil and gas hub was enhanced in August 2017 with the opening of a new open-access liquefied petroleum gas (LPG) import and storage terminal at Saldanha Bay. A public-private partnership is behind the R1-billion terminal, the largest of its kind in Africa. Investors include Sunrise Energy, the Industrial Development Corporation (IDC), the Public Investment Corporation (PIC) and Royal Bafokeng Holdings.

The newly constructed Bergun terminal, comprising 12 tanks located on the Eastern Mole of the Port of Cape Town, has added to the port’s fuel storage capacity and is connected by pipeline to the Chevref refinery.

Gas

The Council for Geoscience (CGS) is doing an intensive study of South Africa’s potential shale gas resources. The major economic sectors using gas are the metals sector and the chemical, pulp and paper sector. Brick and glass manufacturers are also big consumers.

Natural gas lies offshore to the west of South Africa in the Atlantic Ocean (Ibhubesi) and off the southern coast in the Indian Ocean (Bredasdorp Basin). Both fields have great potential: Block 2A of the Ibhubesi gas field north-west of Saldanha is estimated to have reserves of 850-billion cubic feet of gas and the Bredasdorp Basin is said to have reserves of one-trillion cubic feet but getting to the gas has been difficult.

Large quantities of oil are transported around the Cape of Good Hope every year: 32.2% of West Africa’s oil and 23.7% of oil emanating from the Middle East. Reduced global prices for oil and troubles in the container ship market have caused some stress in the local sector but the long-term prospects for shipping and oil and gas are still strong enough for national government to pursue Operation Phakisa (which includes a strong maritime economy push) and for Transnet National Ports Authority to spend heavily on upgrading the nation’s ports.

Industrial gas manufacturing in the Western Cape is a particular focus for Air Products, a part of the Metkor Group controlled by Remgro. The company is the largest supplier in the pipeline and on-site markets, and it also supplies to the packaged chemicals, bulk and chemicals markets.

The gas-to-liquids plant which PetroSA runs at Mossel Bay on the south coast is one of the country’s key pieces of energy infrastructure. Getting new feedstock for this plant is now an urgent priority. Russia’s geological exploration company, Rosgeo, which will see $400-million invested and gas delivered to the gas-to-liquids refinery at Mossel Bay (Mossgas).

The regulator and promoter of oil and gas exploration in South Africa is Petroleum Agency South Africa. In addition to adjudicating on coastal fields such as those along the western and eastern coasts of the Western Cape, the agency has awarded coalbedmethane-gas exploration rights in KwaZulu-Natal and natural gas exploration permits in the Free State.

ONLINE RESOURCES

National Department of Energy: www.energy.gov.za National Energy Regulator of South Africa: www.nersa.org.za Petroleum Agency of South Africa: www.petroleumagencysa.com PetroSA: www.petrosa.co.za South African Oil and Gas Alliance: www.saoga.org.za Transnet Pipelines: www.transnet.net