South African state oil and gas company PetroSA plans to invest 800 million US dollars to develop its offshore gas fields and explore for reserves in the rest of Africa, local newspaper Business Day reported in Johannesburg on Thursday.

The newspaper reported that existing gas reserves in South African waters are expected to run out by 2007, but the company believes its investment program could extend the life of the Mossel Bay plant to 2018.

The gas reserves are critical for South Africa to extend the lifespan of its gas-to-liquid production facility.

Thereafter, a decision would have to be made whether to convert the plant to a conventional crude oil refinery, with feedstock brought in by tanker. Half of the budgeted 800 million dollars is to be invested in a joint venture with US independent oil and gas producer Pioneer to drill six new wells in gas fields off the South African coastline.

These will be connected to the existing drilling platform infrastructure by a new 100-km pipeline, and will supply the PetroSA plant with the feedstock necessary to keep it running.

PetroSA CEO Sipho Mkhize said during a briefing to the parliament's minerals and energy committee on Wednesday that the other 400 million dollars, also self-funded, would be spent on aggressive exploration and production in the rest of Africa.

Concessions had been acquired in Sudan, Equatorial Guinea and Gabon, and opportunities were being explored in Nigeria and Algeria. Exploratory work would also take place in the deep waters off South Africa's west coast in the hope of finding commercially viable reservoirs of oil and gas. Mkhize said a longer lifespan for its existing plant would enable PetroSA to negotiate better interest rates on loans to finance exploration and new projects.

The state-owned gas-to-liquids company generated a 239 million dollars after-tax profit for the year to March.

Source: Xinhua