VZCZCXRO6665
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #1259 1741153
ZNR UUUUU ZZH
R 231153Z JUN 09
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 8871
INFO RUCPDC/DEPT OF COMMERCE WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0993
RUEHRL/AMEMBASSY BERLIN 0683
RUEHBY/AMEMBASSY CANBERRA 0851
RUEHLO/AMEMBASSY LONDON 1757
RUEHMO/AMEMBASSY MOSCOW 1000
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RUEHFR/AMEMBASSY PARIS 1592

UNCLAS PRETORIA 001259 
 
SIPDIS 
SENSITIVE 
 
STATE PLEASE PASS USAID 
STATE PLEASE PASS USGS 
DEPT FOR AF/S, ISN, EEB/ESC AND CBA 
DOE FOR T.SPERL, G.PERSON, A.BIENAWSKI, M.SCOTT, L.PARKER 
DOC FOR ITA/DIEMOND 
 
E.O. 12958: N/A 
TAGS: ENRG EPET EMIN EINV SENV SF
SUBJECT: THE STATUS OF SOUTH AFRICA'S MEGA-HYDROCARBON PROJECTS 
 
REF: 08 Pretoria 2400 
 
This message is sensitive but unclassified, not for Internet 
distribution. 
 
¶1.  (SBU) SUMMARY: South Africa is aiming at a number of 
mega-hydrocarbon projects, highlighted at a recent oil and gas 
conference.  U.S. firm Forest Oil is very close to gaining its 
long-awaited production license for an offshore gas field in the 
Western Cape, which could alleviate regional power shortages there. 
State oil firm PetroSA is confident that it can bring its ambitious 
400,000 barrels-per-day refinery in the Eastern Cape to realization, 
despite challenges with financing and marketing/transport of the 
refined product.  End Summary. 
 
¶2.  (SBU) Minerals/Energy Officer attended the Petro.t.ex Africa 
Midstream and Refining Conference June 9-10 and gave a presentation 
on U.S. views on carbon capture and storage (CC&S).  He highlighted 
the U.S.DOE-led Carbon Sequestration Leadership Forum for its role 
in fostering international partnerships in this area and 
successfully pushing for CC&S to be recognized as an acceptable 
carbon mitigation approach under U.N. conventions. 
 
------------------------------------------ 
Offshore Gas as Part of the Power Solution 
------------------------------------------ 
 
¶3.  (SBU) U.S. firm Forest Oil Commercial Director John Langhus told 
Minerals/Energy Office that Forest is on the verge of obtaining its 
production license for its Ibhubesi gas project, north of Cape Town. 
 This is a step change from Forest's earlier frustration with the 
government licensing process, including conversion to "new order" 
licenses under most current regulations (reftel).  Langhus told the 
conference that Forest and its partners planned to invest up to $4 
billion in developing an offshore gas platform and an associated 
onshore processing plant on the west coast.  He said the project 
expected first gas in 2012, assuming timely licensing to allow 
commencing development.  Langhus anticipated initial gas flow of 100 
million cubic feet per day, increasing to 225 million.  He said 
initial flow rates could support power generation of 400-700 MW. 
Forest is in discussion with the government for provision of a gas 
pipeline to transport the fuel to industrial users, noting that 
Forest is not in a position to be the investor/developer of the 
pipeline. 
 
--------------------------------------------- 
PetroSA's Ambitious Plans for a Mega-Refinery 
--------------------------------------------- 
 
¶4.  (SBU) State oil company PetroSA Commercial Manager Vukani Khulu 
used the conference to present and promote the company's ambitious 
plans to develop the 400,000 barrel-per-day Mthombo crude oil 
refinery at Coega Port in the Eastern Cape.  PetroSA is seeking an 
"anchor partner" to provide equity and crude supply and buy part of 
the refined product, which will adhere to world-class clean 
standards.  The company is looking for financial support or 
guarantees from the SAG.  Khulu said the projected cost of the 
project had declined 20 percent to $9 billion due to a new refinery 
configuration; lower material costs, especially steel; and lower 
Qconfiguration; lower material costs, especially steel; and lower 
engineering and construction costs.  The prefeasibility study 
undertaken by U.S. firm KBR is expected to be completed in 
September, which will allow the project to advance finalization of 
funding mechanisms. 
 
 
¶5.  (SBU) COMMENT: The recent establishment of a domestic presence 
for Forest appears to have borne fruit in the long company's quest 
for a production license.  It will be remarkable given that the 
Department of Mining and Energy has been split into two ministries, 
with hydrocarbons remaining with Mining, rather than Energy.  Forest 
must still work with the SAG to assure pipeline access to market for 
its gas production.   PetroSA's refinery project is ambitious in its 
magnitude, so marketing and transport of product will be an issue. 
The project is far from a done deal. 
 
LALIME