October 15, 2015 / 1:16 PM / 4 years ago

UPDATE 1-South Africa's Mossel Bay GTL plant risks running out of supplies by March 2017

(updates with quotes, details)

CAPE TOWN, Oct 15 (Reuters) - South Africa’s national oil company, PetroSA, says its flagship Mossel Bay gas-to-liquid plant could run out of local gas supplies by 2017 after an offshore drilling campaign yielded only 10 percent of the expected gas reserves.

The $1 billion offshore drilling campaign along South Africa’s southern coast, which completed 3 out of 5 wells before being stopped, only realised 25 billion cubic feet out of an anticipated 242 bcf of gas that could be commercially extracted.

The vital project was seen extending the life of PetroSA’s GTL plant, one of the world’s largest. The facility was operating at half its capacity of 45,000 barrels per day of oil equivalent due to dwindling reserves.

“With the current business model, if we don’t transform and change, if we do things as is, the indications are around March 2017 we will run out of indigenous feedstock,” Kholly Zono, acting vice president operations told Reuters after the company presented it annual results at parliament.

As a result of Project Ikhwezi’s failure to find enough offshore gas, cash-strapped PetroSA had to take an impairment of its GTL facility worth 14.5 billion rand.

Zono said reducing throughput at the plant, extending production at existing offshore wells and enhancing liquid condensate processing were some of the options being considered.

“At the moment in terms of condensate we process about 11,000 barrels per day of condensate, excluding condensate from gas, and we have a project looking to go to 18,000 barrels a day from sometime next year,” he said.

This could be increased later in phases to 25,000 barrels a day, using condensate imported into the country from places such as Algeria, Australia and Norway.

The Mossel Bay GTL plant provides around 5 percent of net importer South Africa’s liquid fuel needs, mostly for the transportation fuel market in the Eastern Cape province. (Reporting by Wendell Roelf; Editing by James Macharia)

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