CAPE TOWN - The Central Energy Fund (CEF) said yesterday that it was in a position where its gas-to-liquid (GTL) refinery at Mossel Bay could run out of gas sometime between 2020 and 2022 when its offshore reserves run dry.
The chairperson of the CEF board, Luvo Makasi, revealed this when briefing Parliament’s Select Committee on Economic and Business Development on the fund’s turnaround plan, aimed to clear governance issues that were affecting the performance of PetroSA and the Strategic Fuel Fund.
The GTL refinery at Mossel Bay, which is owned by CEF subsidiary PetroSA, is the focal point of PetroSA’s production activities.
It was commissioned in 1992 as the world’s first GTL refinery and is the world’s third-largest. Makasi said during Project Ikhwezi in 2014 exploration attempts were a monumental failure.
“When we explored in 2014… we lost about R14 billion in an effort to keep the refinery going. We triggered environmental liabilities – what is known as decommissioning liability – estimated at about R9.6bn.”
He said the fund had been considering a number of options to mitigate the possibility of a shutdown. Makasi said the fund had no intention to borrow to sustain the business, but indicated a possibility to borrow to grow the business.
He likened borrowing to sustain the business to trying to fill a bottomless pit.
The Mossel Bay plant, which accounts for about 6 percent of the country’s refining capacity, operates at less than half of its capacity of 45 000 barrels per day of oil equivalent.
-BUSINESS REPORT