Business
SA gas discoveries face difficulties for use in local market
By Business Live 11/11/20
Nov 13, 2020 - 11:20:43 AM

Apart from the finds being 175km offshore and very deep, the resource is labelled a niche product

The two significant gas condensate discoveries off the coast of Mossel Bay will prove challenging to use in the SA market, according to big-four auditing firm PwC.

In February 2019, Total announced a significant discovery at its Brulpadda well, south of Mossel Bay. Two weeks ago the French oil and gas major announced a similarly large find at the Luiperd well, which lies in the same exploration block.

At the release of PwC’s Africa oil and gas review on Wednesday, the firm’s energy strategy and infrastructure director, James MacKay, said the discoveries, though exciting, were challenging.

Not only were the finds about 175km offshore and extremely deep, the resource was a gas condensate, a fairly niche product, MacKay said.

“It’s only really our PetroSA refinery in Mossel Bay that is geared to handle condensate. It was originally built off the inshore gas field, which was a very similar product — a condensate, largely a wet gas.”

The facility could produce 46,000 barrels a day, a small output compared with that of a global-scale refinery which produced 380,000 barrels daily, MacKay said.

With the discovery at Brulpadda alone estimated to hold 1-billion barrels oil equivalent, “to use that into [the] SA domestic market is going to be challenging because we don’t have refineries set up to do that”.

Among the key findings of PwC’s oil and gas review is that the peak for global oil demand passed in 2019, with the Covid-19 pandemic having hastened the global energy transition by as much as five years.

Due to the pandemic, Africa’s oil producers had been hit hard by a plunge in export revenues, dampened economic activity, severely affected fiscal reserves and overall lower growth prospects, said the review. With oil export markets expected to continue to face rapid decline, oil-producing nations had to move quickly to diversify their economies or risk even great economic stress.

Despite most African countries having policies in place to help green their economies, PwC had found implementation was largely lacking, with low domestic market momentum. PwC said countries could not afford the level of investment or incentives being implemented by the developed world.

The firm said Kenya, Algeria, Egypt, Morocco and SA were the African countries with the most progressive and clear policies, though they remained short of their initial renewable energy installation targets.

PwC said there was a significantly more positive outlook for gas than for oil as it was seen as a bridging fuel in the move towards renewable energy.