PetroSA: Developing Partnerships

PetroSA is a South African based oil company. They have supplied the country with energy for over 50 years. This year, the company struck a $400-million deal with Rosgeo for oil and gas developments.

PetroSA made an agreement with Russian firm Rosgeo in the presence of Ministers of Energy at the 9th Annual Brics Summit on the 5th September 2017.

The agreement enabled Rosgeo to conduct a high volume of geological exploration work for PetroSA. Rosgeo will drill exploratory wells to help the South African energy giant expand their energy reserves. The companies will manage 4,000 square km of 3D seismic operations and over 13,000 km of gravity-magnetic exploration works.

The agreement with Rosgeo has come at a good time. PetroSA, like many energy companies, has faced challenges with resource deficit. However, PetroSA is expecting to recover and prosper with new approaches and a new partnership. On speaking to Energy, Nosizwe Nocawe Nokwe, President and CEO of PetroSA, said:

“There is an energy deficit in South Africa that is hampering our growth. In partnership with the other State-Owned Entities (SOEs), our role is to use some of our technical knowledge to assist with overcoming some of the barriers that may persist. Our energy is coal-fired, which is not environmentally sustainable. We have a role to play in helping to find other sources of energy.”

“We also have a role to play in ensuring that there is sufficient supply of liquid fuels in this country. There are other oil companies that operate in the free market in South Africa, but we see our role as strategically important in making sure that there is security of supply of liquid petroleum fuels. We have also been given the mandate to have sufficient strategic stocks in the country.”

“By increasing the energy flow in the country, we will be able to increase industrialization and move into certain industries that we are unable to move into at the moment because of these barriers. I am, then, specifically talking about gas. We are already a pioneer in Gas-To-Liquids technology, have a wealth of experience and knowledge in this field, and are using our position to further grow in the gas value chain. With that, we have an impact on the energy balance in the country.”

She added:

““We need to be able to attract the attention of like-minded companies on this continent. This can only have a positive impact in terms of job creation and ensuring that the countries we work in are benefitting from our partnering approach.”

Rosgeo plans to extract 4 million cubic metres of gas each day. The gas will be delivered to PetroSA’s Gas-To-Liquids (GTL) refinery, in Mossel Bay, the South Coast processing plant. This is the first plant of its kind in the world, and it is also the third largest GTL refinery ever made.

Now, time is of the essence; PetroSA’s Chief Geophysicist Peter Dekker told Engineering News that current market demand was very good, thanks to a policy shift from coal energy to renewables and gas. The International Energy Agency has predicted the total energy demand to increase by 31% before 2040.

Mr. Dekker also suggested that the Minerals and Petroleum Resources Development Act (MPRDA) will generate a good investment climate.

South Africa’s physical landscape seems to fit the criteria to meet the company’s current needs. According to the Chief Geophysicist, the country’s geology is rich in minerals: perfectly suitable for “new ideas in old exploration areas”. He said:

“We’re looking at the younger rocks, more on the shelf in Bredasdorp”

The Table Mountain group is an option.

The Orange Basin near Namibia is also a possibility. University of the Witwatersrand Geology Masters student, Vuyolwethu Mahlalela, is studying the hydrocarbon potential, using 3D reflection seismic data. It is the first time that 3D data has been acquired in the deep-water environment of the Orange Basin. Mahlalela is creating a 3D model of the deep-water environment while contrasting it to shallow environment models. Mahlalela said:

“The data will give a deeper understanding of the deep-water environment, which could potentially lead to the discovery of offshore hydrocarbons.”

Dekker has agreed that Mahlalela’s work is in a fascinating area which holds promise.

30% of the wells drilled for PetroSA have produced oil and gas to the surface. This technical success rate was considered good and compared very favourably with that of other countries.

In light of this, Rosgeo’s CEO, Roman Panov, the Chairman of the Central Energy Fund Luvo Makasi, and PetroSA’s Interim Chairperson Nhlanhla Gumede felt an agreement was necessary and beneficial.

Mr. Panov said:

“The signed agreement is aimed at developing bilateral relations and will strengthen Rosgeo’s presence in the African market”

The deal will see the Russian company invest about R5-billion for the development and exploration of Block 9 and Block 11a of the South Coast of South Africa.

According to Rosgeo‘s chief executive, Roman Panov, PetroSA would own 30% of the project and Rosgeo would own 70% of the project. This arrangement will promote an increased sense of international relations in addition to future growth.

The Chairman of the Central Energy Fund, Mr. Makasi said:

“This exploration effort presents a significant upside to both the country and to PetroSA. The upside for PetroSA is the possible expansion of our depleting gas resources. Discovery of hydrocarbons on our shores has the potential to bring significant revenues to the country and prove the country’s oil and gas prospectivity,”

More specifically, A find in block 9 and 11a would result in much desired exploration activity of onshore and offshore oil and gas potential. The country and PetroSA will benefit greatly from the find. From the “perspective of PetroSA”, it will result in “cheaper feed” into the Mossel Bay refinery, according to Interim Chairperson Mr. Gumede.

PetroSA has also partnered up with the Venezuelan NOC PDVSA, and have enjoyed successful discoveries and trades. Nosizwe Nocawe Nokwe, CEO of PetroSA, said:

“South Africa is a crude-poor country, which increases our interest in having some access to liquid fuels barrels. Several of the countries that we have good relations with from a government perspective happen to be endowed with some of these resources. We would like to position PetroSA as such a player. The wave of change has started and we cannot lose this window at this point.”

In addition to international success stories and deals, the South African company is working on a human aspect closer to home. Considering South Africa’s wealth inequalities, PetroSA want to supply regular fuel in new forms to disadvantaged, struggling industries and communities. Minister of Energy Dipuo Peters stated:

“PetroSA has a role to play in ensuring the security of energy supply in the country. Last Winter, for example, the company took up the responsibility to convert some of its Mogas into LPG to ensure that the poor and certain industries would still have sufficient supply.”

Furthermore, the company is working alongside communities to construct, implement and maintain reliable facilities. This year, they resurrected a struggling educational facility in Eastern Cape village, by transforming the small mud hut school into a comprehensive centre of modern learning. The Maseleni Junior Secondary School facility took 8 months to construct. All the workers were sourced from the village and its surrounding areas, with more than 50 village residents appointed during the construction period.  

Kholly Zono, PetroSA’s Acting Group CEO, said the project was a manifestation of the company’s long-standing commitment to community development. He said:

“As PetroSA, we are totally committed, despite our challenges, to ensuring that we play a meaningful role in developing historically disadvantaged communities. We could not stand by and watch, while the children of Ntsetshe Village were being educated in a mud structure.”

The school’s principal, Monica Sifuba, has welcomed the PetroSA donation as a life-changing development for Ntsetshe village. She welcomed the development warmly, saying:

“The community has benefited from when construction began, as jobs were created for the village. It feels good for us to now be able to teach our learners in normal classrooms. We are now proud of our beautiful school.”

The company donated R4 million a part of their dynamic Corporate Social Investment (CSI) programme. This supports national initiatives to alleviate some of the poverty in struggling communities and assists in the construction of health, education and environmental sustainability infrastructure.

Since inception, PetroSA has invested a total R356 million towards these initiatives.

A change in the times and a deficiency of resources will not stop PetroSA from making agreements, sustaining energy, and rescuing communities. The multi-million deal with Rosgeo may just be the beginning: Sinopec is increasingly active in exploration across Africa as China ramps up investment in Africa’s oil and gas sectors. PetroSA’s talks with Sinopec raised the possibility of China using South Africa as a launch pad into the rest of the continent: a strategic deal for both companies to make.

One thing is clear: people will always need energy, and PetroSA will always try to provide it for them.