South African Business 2024

OVERVIEW
worked to 12 000km², whereas the exploration right extended to
more than 18 000km². TotalEnergies’ joint venture partners in Block
11B/12B include QatarEnergy and Canadian Natural Resources.
If the process moves further along to the point where TotalEnergies
obtains all the environmental permits it needs and starts to develop the
resource, some estimates suggest that gas could begin to flow by 2026.
Another area of considerable interest is Block 5/6/7 off the West
Coast. Says Van der Spuy, “The area under licence is bigger than the
licence area of the south coast and in our opinion holds great potential.
TotalEnergies and its partners have submitted a work programme for
initial drilling of up to five exploration wells in the area.”
A major milestone was achieved in July 2022 for the Virginia Gas
Project in the Free State, owned by Renergen subsidiary Tetra4. That was
when “natural gas to plant” was achieved. This test allows for the system
to be comprehensively tested, with the inlet line from the gas-gathering
system opened to the process plant and then on to the natural gas
filtration and pre-compression system.
In September 2023, commercial operations of the company’s
liquified natural gas (LNG) plant began. Helium production will follow
but at the time of writing some delay had been experienced. Whereas
it took nine years to find the R1.2-billion needed to fund the first phase
of Virginia Project, investors are now looking very keenly at its prospects.
An amount of R3.6-billion has been invested by Ivanhoe Mines to secure
some offtake rights and the Central Energy Fund has purchased a 10%
stake in Tetra4 for R1-billion.
Gas future
Van der Spuy reports that apart from the biogenic gas discovery being
worked on by Tetra, the country also has “other types of unconventional
gas onshore, such as coal-bed methane and shale gas”.
The National Energy Regulator of South Africa (Nersa) has approved
an application from national utility Eskom to build a 3 000MW gas power
station in Richards Bay.
An allocation of 3 126MW to natural gas has been made in the
national medium-term energy policy to 2030. The National Department
of Mineral Resources and Energy allocated one of the first two gas-topower
plants to be constructed under the Independent Power Producer
Procurement Programme (IPPPP) to Richards Bay. This has the potential
to turn the Richards Bay Industrial Development Zone (RBIDZ) into an
energy hub.
Another site has been identified
within the Coega SEZ in the Eastern
Cape but no plans have been
published. The Western Cape
Provincial Government is lobbying
for Saldanha to receive a licence to
run such a plant.
Environmental groups have
lodged appeals in an attempt to
stop the building of the plant,
which is a step along the pathway
outlined by national government to
use gas as a “transitional fuel”, away
from fossil fuels towards greener
sources of power.
In reaction to the
announcement in 2022 by Shell
Downstream South Africa and bp
Southern Africa of a “spend freeze”
and a pause in operations at the
SAPREF oil refinery in Durban, the
Provincial Government of KwaZulu-
Natal intends facilitating meetings
with these companies and other
interested parties to try to find
a way to restart operations. The
refinery accounts for roughly 35%
of the country’s refinery capacity
and is likely to be offered for sale.
Durban’s other oil refinery,
Enref, was hit by a fire in
December 2020 and there are
plans to convert it to a storage
facility. Astron Energy’s 100 000
b/d refinery Cape Town resumed
operations in 2023 after being
offline for nearly three years. A fire
closed the refinery in 2020. Natref
in Sasolburg is South Africa’s only
inland crude oil refinery and is a
joint venture between Sasol Oil
and Total South Africa. ■
ONLINE RESOURCES
Council for Geoscience: www.geoscience.org.za
Petroleum Agency South Africa: www.petroleumagencysa.com
South African Oil and Gas Alliance: www.saoga.org.za
South African Petroleum Industry Association: www.sapia.co.za
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SOUTH AFRICAN BUSINESS 2024