Release of PetroSA forensic report hits stumbling block

The fight for the release of the forensic report into PetroSA’s R14.5 billion loss last year hit a snag after Parliament decided to discuss it behind closed doors.

Despite giving snippets of the report in the open meeting of the portfolio committee on energy yesterday, the committee agreed to a closed session on the forensic report due to “commercially sensitive information”.

Chairman of the committee Fikile Majola said he agreed with PetroSA that discussions be held behind closed doors and that the forensic report would be made public on November 15.

But opposition parties were not impressed and said if PetroSA had nothing to hide it must make the report public.

In an open session, PetroSA revealed that the R14.5bn loss was caused by poor projections on the gas project in PetroSA’s Cape Town plan, which led to PetroSA takinga R11.3bn impairment on the Ikhwezi Project.

The lack of access to significant volumes of gas also led to the loss.

Acting chairman of PetroSA Bhekabantu Ngubane told MPs that in 2007 studies conducted found that there was a risk that their Mossel Bay gas-to-liquids refinery would run out of gas by 2013.

Project delays It was decided that five newwells must be drilled for the new gas. But there were delays in the project. The first gas came out in December 2014, but only four wells had been drilled. It had been estimated 242 billion cubic feet (bcf) of gas would be drilled, but it only yielded 65bcf.

The PetroSA board realised at the time that drilling the fifth well would not be profitable.

Siphamandla Mthethwa, chief executive of PetroSA, told the committee that 80 percent of impairment was due to gas volumes not realised as the Ikhwezi project yielded much less gas than was expected. The forensic investigation was undertaken to establish who was responsible for this oversight and if there was any negligence.

Neil Robertson, vice-president for new ventures upstream at PetroSA, told MPs the technical findings on the project included weak project management governance.

He said there had been a lack of proper risk management and the project was delayed by 21 months.

In PetroSA’s technical approach there were areas in the ocean they could not access, and there was a reduction in volumes.

“Is there anything we could have done better, we could have embarked on an appraisal to understand the field better,” Robertson said.