- Who thought it was a good idea to entrust the offshore gas industry – and billions of rands of state assets – to a sanctioned Russian bank and a controversial soccer boss with a trail of bad debts?
- Mazars apparently did.
The well-known professional services firm was hired to act as transaction advisor on three calamitous PetroSA deals.
If you’re a regular amaB reader you’ll know that the Equator and EquaTheza deals have been cancelled and the Gazprombank deal is also going that way. If you’re new here, welcome! You can read the backstory by clicking on the links.
Today’s investigation looks at how Mazars got it so horribly wrong and why an Internal Audit investigation advised PetroSA to ask for its money back. Read: Trouble for Mazars over failed PetroSA deals.
One of the things I touch on in the piece is that according to an unnamed member of senior management, Mazars was the only company willing to bid for the transaction advisory work. Everyone else took one look at the Russian connection and said “pass”.
What I don’t go into, but thought I’d mention here, is how little interest there was in bidding for PetroSA’s assets.
In part, that’s probably because PetroSA is an insolvent behemoth that burns money just by breathing. But it also says something about the potential of the offshore gas industry.
The tender to refurbish and restart the gas-to-liquids (GTL) refinery in Mossel Bay was the exception – 20 companies of varying degrees of seriousness bid before the contract was awarded to Gazprombank.
The other two tenders, however – to restart PetroSA’s offshore oil and gas wells and to finance the deal – had painfully few suitors.
Combined with Total’s exit from the neighbourhood – Total held rights over blocks 11b/12b while PetroSA was hoping to exploit adjacent block 9 – the omens for offshore gas don’t look good.
A few years ago, I got the chance to sit down with a senior PetroSA executive to speak frankly about the offshore gas industry. The meeting was off the record so I can’t say who it was or what they said, but I left with the distinct impression that PetroSA knew that it had a narrow window of opportunity to exploit offshore gas before the door slammed shut.
If PetroSA can’t find a reliable partner to take on its offshore gas assets, it’ll likely be forced to close its doors.
While that sounds like a painful but simple solution, it’s not: it’ll cost around R10-billion to shut down and secure the GTL refinery, the offshore FA platform and the wells currently drilled into the bottom of the ocean in order to prevent an environmental disaster.
PetroSA had only set aside R3.5-billion by the February 2024 deadline set out in law, but was given a free pass by the Department of Mineral Resources and Petroleum.
As for the rest of the money? I think you can guess where that’ll come from.
Author: Susan Comrie for amaBhungane
This is an extract from a main article for the amaBhungane Centre for Investigative Journalism. Read the rest of this exclusive story HERE.
The amaBhungane Centre for Investigative Journalism, an independent non-profit, produced this story. Like it? Be an amaB Supporter to help them do more. Sign up for their newsletter to get more.
