Oil and gas

Astron Energy announced that it intended reopening its Cape Town refinery before the end of 2022, having closed the facility for repairs in 2020 after a fire.

Astron’s statement had added significance in the context of the closure of Durban’s two refineries in 2020 and 2021, which left the Sasol/Total inland Sapref refinery as the country’s only functioning facility. When that refinery temporarily shut down in July 2022 because of delays in the supply of crude oil, more concern was raised about the country’s refining capacity.

Astron refinery had been producing about 100 000 barrels per day using feedstock from West Africa, a source which will be reinstated. Cape Town’s oil refinery was previously named Chevron, but with the $973-million purchase of Chevron’s downstream assets in South Africa by Off The Shelf Investments (OTS), it was rebranded as Astron. The Caltex service-station brand was retained. OTS is the Black Economic Empowerment (BEE) partner of mining giant Glencore, who financed the deal. The refinery in Milnerton produces petrol, diesel, jet fuel and liquefied gas for the Western Cape and for export to other African countries. The Western Cape spends R76- billion annually on crude oil imports and exports refined petroleum to the value of R13.2-billion.

Exploration

Important public meetings relating to environmental concerns were set to take place in late 2022 and January 2023. Recent court cases relating to seismic activity off South Africa’s Wild Coast has shone the spotlight on the public participation process when it comes to offshore exploration for gas and oil.

WSP Group Africa has been appointed by the consortium which has discovered gas reserves off the coast of Mossel Bay to run the environmental and social impact assessment (ESIA) for their proposed offshore production. Having notified Petroleum Agency South Africa of their intention to produce, TotalEnergies EP South Africa (TEEPSA), together with its joint venture partners, QatarEnergy, CNR International (South Africa) Limited and a South African consortium, MainStreet 1549, are obliged to run a public process, having successfully explored the area allocated to them off the south-east coast of South Africa.

The same companies and others are also applying for environmental authorisation to undertake exploration activities in Block 5/6/7 between Cape Town and Cape Agulhas, approximately 60km from the coast at its closest point and 170km at its furthest, in water depths between 700m and 3 200m.

Furthermore, potentially important finds were found off the coast of Namibia early in 2022. Shell announced that it had made significant oil and gas discoveries in the southernmost sector of its Orange Basin offshore Namibia but the area is in the same sedimentary basin as South African offshore territory. The geological sedimentary basin extends to offshore Cape Town and out to sea, stretching over 160 000km². The rights to the South African southern section of the basin are held by Shell and its partners TotalEnergies and PetroSA.

Petroleum Agency South Africa (PASA), which encourages exploration and regulates the oil and gas industry, has noted the significance of international oil companies committing to exploration off South Africa’s coast.

Oil and gas infrastructure

The Saldanha Bay Industrial Development Zone Licensing Company (SBIDZ-LC) has announced the start of phase one of the development of the main infrastructure of the IDZ. Located within the southern hemisphere’s deepest and biggest natural port, the company will spend R3.5-billion on developing 356ha of space to enable the port to offer a wider variety of services. A floating dock, ship-lift facilities and marine service jetties will be among the new services created.

Ultimately, the seven-part development plan will see the SBIDZ become a South African Freeport, a Special Economic Zone and customs-controlled area within a port, dedicated to the oil, gas and marine sector. The three main exploration and production customer groups being targeted are:

• Drilling companies: Office space, warehousing, logistical facilities and support services.

• Petroleum companies: Office and warehousing space for an operational base close to active fields.

• Oilfield service companies: 24-hour operational nodes along the coast, in the form of office spaces and warehousing bases. In sites such as Offshore Supply Bases [OSSBs] and/or quaysides for supply and refuelling purpose.

The SBIDZ-LC has established the Saldanha Bay Innovation Campus which aims to promote collaboration between academic institutions, industry, government and the local community specific to marine and

Online Resources

Petroleum Agency South Africa: www.petroleumagencysa.com

Saldanha Bay Industrial Development Zone: www.sbidz.co.za

South African Oil and Gas Alliance: www.saoga.org.za

Western Cape Maritime Cluster: wcmc.org.za energy research, development and innovation. It also intends supporting entrepreneurs and new ventures through incubation and acceleration programmes.

The Western Cape’s status as an oil and gas hub has been enhanced with the opening of an open-access liquefied petroleum gas (LPG) import and storage terminal at Saldanha Bay.

The Bergun terminal, comprising 12 tanks located on the Eastern Mole of the Port of Cape Town, is connected by pipeline to the Astron refinery.

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. Problems 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. ■