MPs reject half-baked report on R14.5bn loss

Johannesburg - The details of PetroSA’s massive R14.5 billion financial loss last year will not be known for now after the Department of Energy was refused by MPs to present a half-baked report.

Members of the portfolio committee on energy yesterday demanded a full forensic report of the financial loss by the state’s oil firm.

Committee chairman Fikile Majola said they would not tolerate the conduct of the department to refuse handing over the full forensic report as ordered by Parliament.

Majola gave the department until November 1 to come back with the report.

In the presentation, the department blamed the losses largely on non-performance of PetroSA’s Ikhwezi project in Mossgas.

“The Ikhwezi project’s main failure occurred as a result of low gas volumes compared to what was predicted,” it said.

Reservoir risk

“This can be attributed to a poor or lack of understanding of the reservoir risk in drilling the F-O field.”

The F-O field is situated 110km from the nearest landfall and 40km south east of the F-A platform, which supplies gas and condensate to the PetroSA gas-to-liquid plant in Mossel Bay.

“The project eroded value,” said.

The department said that the gas volumes were reduced by 70 percent from the flame ionisation detector plan.

The investigation was called by Parliament and the portfolio committee said yesterday it could not allow the department to keep the report when it had been concluded.

The committee said it wanted the full forensic report it had called for after departmental officials indicated the Minister of Energy Tina Joemat-Pettersson was still studying the report.

ANC MP Thandi Mahambehlala warned fellow MPs that she had been informed that the report was very bad.

“The committee cannot expect to get some good news on it, and in fact, must prepare for a very bad report on PetroSA’s finances,” Mahambehlala said.

Back on track

Majola said their job was to help the state oil firm to get back on track.

He said this forensic report would be able to give Parliament direction in terms of intervening in critical areas, charging that the while the committee did not want to fight with the department, it was against keeping a report that was completed about three weeks ago. MPs said they could not wait for far too long because PetroSA could deteriorate further.

In the report tabled before MPs it said Project Ikhwezi’s bid to find more gas at Mossgas was unsuccessful.

The loss of R14.5bn was a massive loss for the entity.

The reasons for the loss included lower reserve volumes from gas fields and the reduction of Brent crude prices.

The department is expected to return to Parliament with PetroSA to present a full forensic report to MPs next month.