Timing key to deep-water South Africa gas projects
Total’s large deep-water South African gas discoveries are potentially transformational for the country. But at the moment there is no clear route to commercialisation, according to GlobalData.
Oil & Gas analyst Conor Ward said: “The discoveries of Brulpadda and Luiperd offer South Africa the chance to develop significant gas resources and reduce its reliance upon imports.
“However, Sasol, a state-owned oil and gas company, currently supplies around 80% of the country’s gas demand via its pipeline from Mozambique.
“Development of South Africa’s newly discovered gas resources face competition from established imports flowing from Mozambique, LNG regasification, and a currently unclear domestic gas outlook.”
The gas imported via Mozambique costs around US$6-7/MMcf. A breakeven cost of around US$3/MMcf for a Brulpadda/Luiperd development would, therefore, be competitive, GlobalData claimed.
As the Mossel Bay Gas to Liquids plant is running out of feedstock due to depletion of domestic fields, newly discovered resources would likely not be developed sufficiently quickly to ensure supply in the near term.
An alternative could be LNG regasification, as a contract period of just five to eight years has been stipulated in the tender documents.
Mr Ward added: “The hurdles to development for Brulpadda and Luiperd are not insurmountable, but timing will be a key factor determining a path to monetisation as the discoveries will be unable to alleviate the country of its near-term gas shortage challenge.”
Source: Offshore Magazine