PetroSA in talks to import gas

Cape Town - South Africa's national oil company PetroSA said on Monday it was in talks with an unnamed party to import 500,000 tonnes of liquefied natural gas a year to help extend the life of its Mossel Bay gas-to-liquid (GTL) refinery.

Mossel Bay, along the southern coast, is expected to run out of gas supplies by 2011 and is one of the world's largest GTL plants.

"We hope to start by importing 500,000 tonnes and ramping this up," Everton September, PetroSA's vice president for new upstream ventures told Reuters in an email.

He declined to name the party PetroSA was negotiating with.

"We project that this gas (at Mossel Bay) will run out in 2011," said September.

"However, we hope that the importation of LNG and the exploitation of indigenous gas fields will extend the life of the GTL facility to beyond 2015."

PetroSA said it was trying to get a better deal on the cost of the gas imports.

PetroSA was already looking for sites for a proposed liquified natural gas (LNG) offloading facility in South Africa's Western Cape province, estimated to cost $250m.

PetroSA said last year it would spend $650m to drill and explore new offshore gas reserves to sustain the refinery.

September said PetroSA's discussions with US gas explorer Forest Exploration International to develop the promising Ibhubesi project was also making progress.

"Negotiations... are expected to be concluded by end July 2009," he said.

Depending on a government permit, production in the Ibhubesi gas field off South Africa's west coast could start in 2012. Initially drawing 100 million cubic feet of gas a day, the well would eventually produce enough gas to produce up to 700 megawatts of power.

September said PetroSA has focussed its natural gas exploration activities in southern Africa, while also exploring for oil in Egypt, Sudan and Equitorial Guinea.

PetroSA last year signed an energy agreement with Venezuela's PDVSA for offshore gas exploration in Venezuela.

- Reuters