The government-owned national oil company, PetroSA, has signed a R 1.2 bn procurement deal with an empowerment company.
In what is considered one of the major black economic empowerment deals in the oil and gas industry, Mesa Pty is set to supply more than 30 000 tons of condensate a month to PetroSA over the next two years. Condensate is a gas deposit used to make petrol and oil. Bongani Raziya, CEO of Mesa, said the agreement would keep them in business for another three years.
The company trades in various oil and gas products with countries like Australia, Norway, the United Arab Emirates and Equatorial Guinea.
“The barriers to enter this trade are very high… this deal will keep us afloat and ensure that we are able to put food on the table for a while,” said Raziya.
Even though the deal only forms 10 % of what PetroSA requires, CEO Sipho Mkhize said it was not just a hand-out to help the empowerment company. It was a business imperative, he said, which would ensure the security of supply while cutting the risks of buying on the spot market.
Of the five companies that tendered, Mesa presented the most competitive bid, which covered technical expertise, commercial value, and empowerment compliance, said Nokwanele Qonde, acting general manager of trading supplies and logistics at PetroSA. The Mossel Bay-based oil company was also looking for a flexible supplier that could keep its costs down.
As a government-owned company, PetroSA could not offer an equity deal, but Mkhize said that finding an empowerment supplier was its way of contributing to black economic empowerment. Some of the revenue generated from the deal should also be used for training opportunities.
“It’s important to understand the entire value chain of the industry. We will conduct frequent audits to ensure that there is compliance on this aspect,” said Mkhize.
The local petroleum industry is dominated by six major international companies including Shell, Engen, BP, and Total. Mkhize warned that black economic empowerment companies should do their homework and be competitive to survive in the market.
“The market is not there to help the cause of black economic empowerment. These companies must be competitive,” he said.
Raziya said that its deal with PetroSA was the kind of contract the company needed to entrench its position in the oil and gas industry.
Source: Cape Argus
