PetroSA's $400m Russian deal nothing to do with board ructions, says CEF chairman
PetroSA signed a deal with Rosgeo on the sidelines of the Brics Summit in China for oil and gas development on SA’s coast
State oil company PetroSA has signed an agreement with Russian geological exploration company Rosgeo, for about $400m to be invested in oil and gas development.
Business Day reported last week that former PetroSA board member William Steenkamp had accused Central Energy Fund (CEF) chairman Luvo Makasi in court papers of firing the board because it did not support a partnership with a Russian company linked to President Jacob Zuma.
Steenkamp has lodged an urgent application to set aside his axing and that of Owen Tobias, another board member, and for them to be reinstated.
According to the founding affidavit filed by Steenkamp, the PetroSA board was fired because it had not signed due to its failure to sign off on the Rosgeo deal.
In June 2017, six board members resigned from PetroSA after Makasi had instructed its members to resign with immediate effect, or submit oral representations at the annual general meeting as to why they should stay.
PetroSA had eight board members and in May, Business Day was informed two had tendered their resignations. Steenkamp and Tobias were removed in July 2017 and an interim board appointed.
Interim board member Leanne Williams has since resigned, following allegations of corruption at PetroSA.
Rosgeo had provided a framework agreement on the Block 9 matter in April 2016, which was rejected at a board meeting in November 2016, as it was presented with binding terms whereas the process to award the farm-out for Block 9 had not been finalised.
Makasi, responding on Monday from China to questions about the matter, said the removal of the previous PetroSA board was not related to the Rosgeo matter, as he had stated in his responding affidavit.
“More so, the matter which is alleged to be the reason thereof [the board removal] had never been brought by the previous board to our attention as the CEF board and thus no reference is made to it in any correspondence between the CEF board and the previous PetroSA board, thus it could not have been the reason for the disagreement.”
The exploration agreement was signed on the sidelines of the ninth annual Brics summit in Xiamen, China, by Rosgeo CE Roman Panov, Makasi and interim PetroSA chairman Nhlanhla Gumede, in the presence of Energy Minister Mmamoloko Kubayi, PetroSA said on Monday. The agreement involved the development of exploration areas of Block 9 and 11a off the south coast of SA.
“Within the framework of the agreement, Rosgeo is supposed to conduct a considerable volume of geological exploration work. In particular, it is planned to carry out more than 4,000km² of 3D seismic operations and over 13,000km² of gravity-magnetic exploration works, as well as the drilling of exploratory wells,” PetroSA said.
It said the project envisaged extraction of up to 4-million cubic metres of gas daily. This would subsequently be delivered to PetroSA’s gas-to-liquids refinery in Mossel Bay.
“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,” Makasi said.
PetroSA has suffered huge losses over the past three years and has a projected loss of R2.2bn for the year to March 2017. This follows its record R14.6bn net operating loss in the 2014-15 financial year.