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Russia Looking To Revive South African Gas Refinery

South Africa’s PetroSA and Russia’s Gazprombank are currently investigating the feasibility of restarting operations at South Africa’s gas-to-liquid (GTL) fuel plant in Mossel Bay in South Africa’s Western Cape.

PetroSA spokeswoman Nonny Mashika-Dennison has said that all factors affecting the viability of restarting operations at the refinery were being considered as part of a comprehensive assessment. The Mossel Bay plant, which is capable of processing up to 45,000 barrels per day, halted production in 2020 due to depleted domestic offshore gas reserves, and has been under maintenance ever since. Following the closure of South Africa’s two largest refineries, Sapref and Enref, PetroSA is eager to secure investment to restart operations at the Mossel Bay facility.  

In December, PetroSA selected Gazprombank Africa as its preferred investment partner for the project – a decision endorsed by the South African government despite potential issues involving Western sanctions. Gazprombank, Russia’s third-largest bank and a crucial institution in Moscow’s energy trade, has been the target of sanctions by the US and other Western nations due to the ongoing Ukraine conflict.

South Africa and Russia are members of the BRICS alliance that also includes Brazil, India, China, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. Facing pressure from the US and its allies following the Russia-Ukraine conflict, Pretoria has opted for a neutral position. This nonalignment poses a potential risk of secondary sanctions if the African country engages in agreements with any sanctioned Russian entities.

However, PetroSA officials have taken legal advise to minimize the risk of secondary sanctions, with PetroSA’s acting chief operations officer, Sesakho Magadla, saying that “these sanctions are not applicable to South Africa.”

The Mossel Bay GTL revival project is estimated to cost approximately US$200 million.

Further Reading

Russia-South Africa 2024 Trade

Russia’s 2024 trade and development dynamics with South Africa are comprehensively featured in our Russia’s Pivot To Asia 2024 Guide. This is a complimentary download and can be accessed in English here and Russian here.

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