Zululand wants PetroSA’s Ikhewzi production rights suspended

The Department of Mineral Resources (DMR) has confirmed that it has received an appeal from black economic-empowerment (BEE) firm Zululand Oil & Gas Resources against the granting of national oil company PetroSA’s Ikhwezi production right, off the south coast of South Africa.

PetroSA was granted a production right for Ikhwezi in November last year.

Zululand chairperson Ebrahim Sayed said his company had lodged an appeal in December, citing the alleged noncompliance with Section 84 of the Mineral and Petroleum Resources Development Act, which states that the granting of a right should substantially and meaningfully expand opportunities for historically disadvantaged persons, including women, to enter the mineral and petroleum industries.

“They [PetroSA] have the production rights but they did not comply with the application of the production rights. We are, therefore, appealing to suspend or cancel the production rights,” Sayed said.

Zululand, which applied for a participation opportunity by expression of interest in the FO tract in 2006, believes that PetroSA had to select a BEE partner before it could be granted a production right, but PetroSA spokesperson Thabo Mabaso disagrees.

He said PetroSA had not advertised for a BEE partner to date. “PetroSA will fulfil its obligations contained in the production rights for the block, which may include an open and transparent process of engaging potential BEE partners.”

Mabaso added that, should PetroSA advertise for a BEE partner, it would be done after production started.

PetroSA also denied that it had any commercial relationship, or a promise of one, with Zululand. “The only agreements between Zululand Oil & Gas and PetroSA are confidentiality agreements, in which Zululand has certain obligations, including holding PetroSA’s information confidential,” he said.

The project, which focuses on new gas reserves to extend the life of the Mossel Bay gas-to-liquids refinery, incorporated the F-O gas field that lay in the FO tract, in Block 9, 40 km southeast of PetroSA’s F-A production platform off the south coast of South Africa.

“We had various agreements with them during the exploration phase in Block 9, in the F-O field where we were given the information [commercial, financial and technical] we needed to raise capital to buy into the development and production phase,” Sayed said, adding that the company had raised R1.2-billion to buy into the project.

DMR spokesperson Trevor Hattingh told Engineering News Online that the case was getting the necessary attention and that the appeal authority would take a decision soon.

Meanwhile, Mabaso said first production at Ikhwezi had been delayed to the final quarter of 2013, from the original starting date in May. He explained that early challenges with the drilling rig and delivery times of specialist proprietary equipment from Europe and the US had pushed back production.