PETROSA
PETROSA
Russian Partnership Offers New Hope
For Energy Giant PRODUCTION: Manelesi Dumasi
PetroSA has signed an exploration agreement with Russia’s Rosgeo. The pair will explore for valuable oil and gas resources off the South Coast of the Cape. This could be a solution to a longstanding problem of feeding the company’s hungry Mossel Bay GTL.
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After a turbulent few years for South Africa’s national oil company, PetroSA, positivity began to flow in September after a deal was inked with Russia’s Rosgeo. The exploration company is part of the wider Rosgeologia, a Russian multiindustry geological holding company, which offers a full range of geological exploration services, from regional surveys to stratigraphic drilling and subsoil monitoring. Following leadership uncertainty,
corruption allegations, questions of financial mismanagement, and the infamous Project Ikhwezi, PetroSA welcomed the R5.2 billion commitment from Rosgeo, which will see the pair extract gas off the south coast. This will feed into the company’s GTL (gas-toliquids) refinery at Mossel Bay where unique GTL Fischer-Tropsch technology is used to create ultra-clean, low-sulphur, low-aromatic synthetic fuels and high-value products converted from natural methane-rich
gas and condensate. Rosgeo will carry out more than 4000 square miles of 3D seismic operations and over 13,000 miles of gravity-magnetic exploration works, as well as drilling of exploratory wells in blocks 9 and 11a off the south coast of South Africa. Estimates suggest that the region could hold mass reserves and the businesses are expecting four million cubic metres of gas daily. Signed when the companies came together at the 9th Annual Brics Summit
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INDUSTRY FOCUS: ENERGY
in Xiamen, China, the ministers of energy for both Russia and South Africa were present. “The signed agreement is aimed at developing bilateral relations and will strengthen the company’s presence in the African market,” said Roman Panov, Rosgeo CEO. Luvo Makasi, the Chairman of the Central Energy Fund (PetroSA’s key shareholder) said: “South Africa’s oil and gas potential remains largely unexplored. This exploration effort presents significant upside to both the country and PetroSA. The upside for PetroSA is the possible expansion of our depleting gas resources. Discovery of hydrocarbons on our shores has the potential to bring significant revenues to the country and prove the country’s oil and gas prospectivity.” PetroSA’s interim Chairperson added: “A find in block 9 and 11a would result in much desired exploration activity of our onshore and offshore oil and gas potential. The country and PetroSA will benefit greatly from the find. From the perspective of PetroSA it will result in cheaper feed into the Mossel Bay refinery.” “добро пожаловать” (welcome) is very much the message coming from PetroSA as it looks to secure finances following the announcement of a R14 billion losses after its last failed attempt at solo offshore drilling. Although not all details of the arrangement are currently clear, some reports suggest that any gas produced from ‘block 9’ could be 65% owned by Russian parties and South Africa would be forced to purchase the gas – an idea that has attracted criticism. However, Russian-South African business relations are enjoying a fruitful period. Exports from SA to Russia are strong, following a successful trade visit back in September. The two countries worked closely on a successful nuclear power construction bid (which was later shelved following a court ruling) which would see Russia’s Rosatom help South Africa build new nuclear power stations;
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both nations now enjoy restriction free travel, and President Zuma has invited President Putin to visit later this year, cementing the ties that Russia desires following a period of sanction-hit economic sloth. The Russian factor could become very important for PetroSA which is currently implementing a ‘business turnaround plan’ and desperately needs to source new input for its GTL refinery which is seeing a mass drying up of current feedstocks. “PetroSA wishes to assure South Africans and our various stakeholders that as the Board and its employees we are committed to the sustainability, turnaround and long-term growth of the company. We are confident that the shareholder will give the necessary support, where appropriate, to ensure that we return the company to its former glory,” the company said earlier this year. Away from international deals and future proofing, PetroSA remains a key contributor to the South African economy and continues to commit financial and operational resources to the upskilling and development of people, and the developing of communities. In its 2016 annual report, the company stated that it had ploughed R21 million into community development, R20.9 million into health, R10.4 million into education alongside a number of other projects. A fantastic example of the good work being done by PetroSA in this regard came in August when the company announced it had donated R4 million for the complete reconstruction of the Maseleni Junior Secondary School, at Ntsetshe Village, Dutywa, in the Eastern Cape. The previously dilapidated and rundown facilities at the school were replaced and upgraded with modern offerings including an all-new administration block, three modern classrooms and ablution facilities. The 130 students at the school received their new facilities from Minister of Energy, Ms
Mmamoloko Kubayi. “As PetroSA, we are totally committed, despite our challenges, to ensuring that we play a meaningful role in developing historically disadvantaged communities. We could not stand by and watch, while the children of Ntsetshe Village were being educated in a mud structure,” said PetroSA’s Acting Group CEO, Kholly Zono. “We had to step in to ensure decency and respectability was restored for the learners and educators,” he added. This is just one of the exciting projects which has shown the potential of PetroSA to effect positive change in South Africa. The company has invested R356 million in similar projects since its inception. Recent initiatives include, investing R1.5 million towards the modernisation and refurbishment of 21 Early Childhood Development (ECD) centres; the construction of a R6 million state-of-the-art youth centre in Great Brak, Mossel Bay; construction of a R14 million Integrated Energy Centre (IeC) at Qamata, near Cofimvaba among others. With the exciting news of Russian investment and an ongoing focus on CSI, now is an important period for PetroSA and one which will define its future as South Africa’s national oil company with an African influence. As a highly innovative operation, with a long history in South Africa, it is imperative that this operation succeeds and with a viable business turnaround strategy underway, the hope is that this significant business will be returned to former glories sooner rather than later.
PETROSA +27 21 929 3000 www.petrosa.co.za
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Issue No.63
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TRANSNET PORT TERMINALS
Making SA Ports
World Class Exclusive Interview with
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ENTERPRISE AFRICA
OCTOBER 2017