Thursday, June 11, 2009

South African iBhubesi plans to pump $4bn into offshore gas platform

June 11, 2009 - Business Report - By Justin Brown

iBhubesi Gas planned to spend up to $4 billion (about R32bn) developing an offshore gas platform and onshore processing plant on the west coast over the next 20 years, John Langhus, the commercial director of Forest Exploration International, said yesterday.

Langhus said at the Petrotex Africa 2009 conference that iBhubesi was expecting to produce its first gas in 2012.

Initial gas output was expected to be 100 million cubic feet a day, increasing to 225 million cubic feet.

Langhus said: "At the initial projected flow rates, iBhubesi could be capable of providing between 400 megawatts and 700MW of electricity."

iBhubesi is owned by Forest Oil (53.2 percent), PetroSA (24 percent) and Anschutz (22.8 percent).

The company is expecting to get its production permit approval this month from the Petroleum Agency of SA (PetroSA).

An extra cost related to the west coast project was the building of a gas pipeline by the government to transport the fuel to industrial users, Langhus said.

"Forest is in discussions concerning onshore pipeline alternatives," he added.

iBhubesi's offshore platform, gas plant and onshore pipeline are likely to generate 292 jobs during construction, and 114 jobs are to be created during the facility's operation.

In another development, Vukani Khulu, the commercial manager of PetroSA, told the conference that the cost of the agency's 400 000-barrel-a-day Mthombo crude oil refinery, to be built at Coega, had declined by $2bn to $9bn.

Khulu said the 20 percent decline in the cost of the project was due to a new refinery configuration; lower material costs, especially for steel; and lower engineering and construction costs.

PetroSA is speaking to HSBC regarding funding the development of the Mthombo.

The group is also talking to the National Treasury about the project, including the possibility of financial guarantees.

Khulu said PetroSA was looking for an "anchor partner" to provide crude supply and buy part of the refined crude oil. PetroSA wanted to take a 37.5 percent stake in the refinery.

"Companies will be invited to invest in different parts of the project," said Khulu.

The prefeasibility study for Mthombo will be completed in September.