South Africa to spend $650 mln on oil exploration

February 25, 2008 (CAPE TOWN) — South African state-owned oil company PetroSA will spend $650 million over the next two years to help secure energy to help alleviate the country’s power crisis, a senior official said on Monday.

PetroSA was also in talks with power utility Eskom to provide gas for new gas-fired power stations.

“Through the drilling campaign over the next two years, PetroSA will spend approximately $650 million to contribute to security of supply by extending the gas reserves in its Block 9 (acreage),” Everton September, the company’s vice president for upstream new ventures told Reuters in an interview.

PetroSA manages South Africa’s strategic oil inventory and explores for oil and gas mainly in Africa.

It has ramped up its gas and oil exploration activities as South Africa struggles to come to grips with a power shortage which has plunged millions of homes in darkness and cut off electricity to mines and other businesses.

“We will fund it from our balance sheet… We have the capacity to do that,” September said.

September said PetroSA will maintain 36,000 bpd gas production to 2020 through eight new projects along South Africa’s south coast with the first gas from these projects to be piped in mid-2010.

The company’s flagship Mossel Bay gas-to-liquid (GTL) plant, which produces 45,000 bpd, is expected to run dry by 2015 unless satellite gas fields are exploited.

PetroSA is a pioneer in GTL technology and has interests in Nigeria as well as recently acquired exploration fields in Mozambique, Namibia, Sudan and Egypt.

(Reuters)