PetroSA Secures Partnership with Gazprombank to Revive Mossel Bay Refinery

In a move that is bound to raise international eyebrows, South Africa's cabinet has sanctioned a significant partnership between the state-owned petroleum company PetroSA and Russia's Gazprombank. The collaboration aims to reinvigorate the gas-to-liquids refinery located in Mossel Bay, a venture that is poised to inject approximately R3.7 billion into the nation's economy.

amaBhungane's investigative journalist Susan Comrie provided insights into this development during a conversation with The Money Show's Bruce Whitfield. According to Comrie, Gazprombank, which ranks as Russia’s third-largest bank, actively sought out the partnership, culminating in its proposition to PetroSA to reboot the Mossel Bay refinery operation. Gazprombank's sole bid, in response to the tender put forth by PetroSA, was successful, raising questions about the competitive nature of the bid process.

The decision to proceed with Gazprombank arrives amidst extensive U.S. sanctions against the bank for its asserted complicity in supporting Russia's military actions in Ukraine. Nonetheless, the South African cabinet has stood by the decision to endorse the deal, underlining the need for economic and strategic interests in the country's energy sector.

The revival of the Mossel Bay refinery is not merely an economic venture; it bears significant socioeconomic implications, notably the creation of at least 4,000 jobs, a boon for the local community and broader national employment landscape.

The engagement with Gazprombank is not singularly financial but extends to technical refurbishment, signaling a substantial uplift of the facility. Gazprombank’s "face of the deal" role signifies Russian enterprises' sustained interest in South Africa's burgeoning gas industry, an area seen by many as ripe for development.

Similar to its global peers, PetroSA has been under scrutiny and criticism for its lack of transparency and responsiveness regarding information disclosure, as required by governmental procurement laws. The approval of this deal could amplify calls for greater openness in the state-owned entity's operations and its adherence to statutory regulations.

The endeavor to restart the Mossel Bay refinery aligns with broader strategic goals within South Africa's energy framework and the push to strengthen capabilities in gas processing and liquified natural gas production. It is a step that underscores the country's pursuit of energy security and economic diversification, despite the complexities of international politics and compliance with global sanctions regimes.