PetroSA and Pioneer Natural Resources Reach Agreement on South Coast Gas Development

PetroSA and Pioneer Natural Resources Company have reached an agreement to develop gas fields previously discovered offshore South Africa. The companies have signed a memorandum of understanding finalizing the terms for jointly developing the South Coast gas fields to provide feedstock for PetroSA's onshore gas-to-liquids (GTL) plant at Mossel Bay. The agreement is subject to customary approvals by the board of directors of each company, expected by the end of October.

Sipho Mkhize, PetroSA President and Chief Executive Officer, stated, "The development of South Coast gas will contribute towards the sustainability of the GTL refinery in Mossel Bay. I believe that this agreement will deliver good results."

Since 2003, PetroSA and Pioneer have been producing oil from the Sable field while reinjecting associated gas. The South Coast Gas project will include the subsea tie-back of gas from the Sable field and six additional gas accumulations to the existing production facilities on the F-A platform for transportation via an existing pipeline to the GTL plant. Production is expected to begin during the second half of 2007 and increase to an average of approximately 100 million cubic feet per day of gas and 3,000 barrels per day of condensate over the initial phase of the project through 2012. PetroSA will be the operator of the project with a 55% interest. Pioneer holds a 45% interest.