South Africa's Cabinet of Ministers has endorsed a proposal by state-owned oil and gas firm PetroSA to select Russia's GazpromBank Africa as an investment partner for the revitalization of the Mossel Bay gas-to-liquids plant, the government news agency said, citing Minister in the Presidency Khumbudzo Ntshavheni.
Highlighting the strategic importance of the refinery in PetroSA's turnaround plan, Ntshavheni emphasized that Cabinet was briefed on the meticulous process undertaken by the Central Energy Fund to identify partners with both technical expertise and financial resources critical to assisting PetroSA in returning the refinery to full operations.
"The preferred partner would share in the risk and rewards of reinstatement of the refinery," Ntshavheni stated.
She added that the final selection decision will depend on a final investment decision based on the business model in April 2024.
The minister outlined the economic benefits that could result from the reconstruction of the refinery and mentioned job creation as a potential positive outcome.
"The refinery reinstatement has a potential to retain at least 2000 direct site jobs, with an additional potential fixed term employment opportunities for 4,000 jobs during the construction phase," she said.
Against the backdrop of Gazprombank being sanctioned by countries such as the UK, Canada and the US, PetroSA representatives said they had taken legal advice and noted that the Western restrictions would not affect their cooperation with the Russian company.
"These sanctions are not applicable to South Africa," Sesakho Magadla, PetroSA's acting chief operations officer, said, as quoted by media.
The 45,000 bpd Mossel Bay plant has been on maintenance since 2020 due to feedstock issues. PetroSA noted that the plant can process both gas and liquefied gas and that a long-term feedstock solution is under development, with full production capacity expected by 2027-2028.
According to Western media, the Mossel Bay plant is a key issue in PetroSA's negotiations with France's TotalEnergies, which is exploiting another gas field offshore South Africa and wants to use PetroSA's existing platform.
In July, during the Second Russia-Africa Summit, President Vladimir Putin said that Russia is working on 30 promising joint energy projects in 16 African countries.