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PetroSA to Sign Energy Deal With Venezuela

08-25-2008

PetroSA, the state owned oil company of South Africa is paving the way to enter and acquire assets in Venezuela. President Hugo Chavez is expected to sign this energy deal next week.

PetroSA has held high-level discussions with its Venezuelan counterpart, PDVSA, on projects including oil exploration and the production of heavy crude oil in the Orinoco belt of Venezuela.

Everton September, vice president of PetroSA's new ventures unit, said that Chavez's signature was needed to formalise a memorandum of understanding.

"The MOU will come into effect immediately upon signature. PetroSA would like to acquire an oil producing asset in Venezuela (and) receive a direct crude allocation from PDVSA in the short term, between 6 months and one year," September said via email.

"In the medium term (between 1 and 2 years), offshore natural gas opportunities (and) opportunities that commercialise our GTL technology and LNG opportunities will be investigated."

PetroSA operates one of the world's largest gas-to-liquids (GTL) refineries at Mossel Bay on the southern coast of South Africa, and is actively pursuing oil exploration in Equatorial Guinea, Gabon and Egypt.

September said no projects had been identified yet and it was premature to speculate on the size of the Venezuelan investment or proposed output volumes.

September said on Monday oil from Venezuela could be earmarked for PetroSA's new $7 billion Coega refinery project, which would produce 250,000 barrels per day.

The refinery, expected to come on stream by 2015, would position PetroSA to export oil throughout southern Africa.

Venezuela is presently South Africa's third largest trading partner within the Andean Community, with total trade between the two countries valued at 896 million rand in 2007.

South Africa's imports are now dominated by petroleum oil, which accounted for 90 percent of total imports from Venezuela in 2007, figures from the Department of Trade and Industry show.