PetroSA has appointed Pragasen Naidoo to serve as the company’s CEO, a position that has been held on a temporary basis since 2014.
Confirmation of Naidoo in the role is subject to approval from the Central Energy Fund (CEF), PetroSA’s shareholder on behalf of the South African government. The official had previously served CEF as the group’s chief operations and business development officer. He replaces Bongani Siyadini.
PetroSA’s chairperson Frans Baleni said Naidoo brought “demonstrable industry experience and acumen” to the role, providing “good governance, operational excellence, and sustainable growth”. Baleni went on to say the board was confident that the new executive would address the company’s “sustainability challenges, as well as positioning PetroSA for the future”.
CEF’s chairperson Monde Mnyande endorsed Naidoo in the role, saying that the group had “initiated a roadmap to build a solid foundation for the long term sustainability of the group”. The importance of PetroSA to CEF is notable, with the oil company providing 85% of the government fund’s revenue.
The challenges facing PetroSA’s new executive are daunting. The company’s flagship Mossel Bay gas-to-liquids (GTL) refinery is running out of supplies, with projections that the offshore gas will be exhausted by the end of 2020.
Furthermore, according to CEF’s most recent annual report, PetroSA has rehabilitation and abandonment obligations of 9.8 billion rand ($681 million), but has set aside only 2.4bn rand ($167mn) for these costs. The company is required to have covered this liability shortfall by February 2024.
PetroSA launched an emergency plan in February 2019, which focused on cutting spending and rationalising the company’s portfolio. Project Phoenix, as it was known, “depends on rebuilding the management team at PetroSA”, with the company saying CEF was in support of this goal.
“In the light of the newly released draft Upstream Petroleum Resources Development Bill, the PetroSA leadership position is a critical one,” the South African Oil & Gas Alliance’s (SAOGA) acting CEO Adrian Strydom said. “PetroSA is earmarked to be the recipient of the carried interest as indicated in the Bill. This will require from the PetroSA leadership and its Board to be seen as legitimate, forward thinking and ethical. PetroSA will have to be a robust and pro-active company, able to respond aggressively to the demands that it will be facing the industry. The game is changing.”
One area that may offer some hope for the Mossel Bay plant is through Total’s work on the Brulpadda discovery. This contains some amount of gas and there is some infrastructure available that could carry gas to the facility.
Africa Energy, which is a junior partner to Total on the Block 11B/12B, said this week that the Luiperd-1 well was expected to be spudded in the second quarter of this year. The Deepsea Stavanger will drill up to three consecutive exploration wells on the area, it said.
Updated January 24, 09:20am with comment from SAOGA’s Strydom.