Mineral and petroleum minister Gwede Mantashe has confirmed that PetroSA cancelled its deal with Russia’s Gazprombank to restart the Mossel Bay refinery.
Critics, including the DA, argued the Russian bank’s involvement in the West Coast gas-to-liquid refinery bore the hallmarks of corruption and have long called into question the integrity of the deal.
PetroSA is a wholly state-owned oil and gas company that primarily drills for offshore natural gas in the West Coast and converts it into synthetic fuels.
The bank has been mired in controversy over its role in Russia’s war on Ukraine, leading many to wonder why the SA government was not more hesitant to select Gazprombank as a partner in the Mossel Bay project.
According to US officials, which imposed sanctions on the bank in November, it acts as a conduit for the Russian government to compensate soldiers, buy military equipment and fuel its war machine.
In a statement on Thursday, Sphesihle Zondi, the DA’s deputy spokesperson on mineral and petroleum resources called “for an inquest at PetroSA to determine why Gazprombank Africa was chosen in the first place”.
In January, the amaBhungane Centre for Investigative Journalism reported that Gazprom had failed to deliver $200m (R3.7bn) in funding required to restart the refinery and $3m (R56m) for a bankable feasibility study, leaving the proposed transaction in limbo for several months.
- Energy security: The Mossel Bay refinery once produced 45,000 barrels a day. Its prolonged shutdown leaves SA more reliant on costly imports.
- Geopolitical tension: Partnering with a sanctioned Russian bank risked alienating key Western partners and contradicted SA’s stance of “non-alignment”.
- Governance concerns: Cabinet’s approval of Gazprombank raised questions about due diligence, political interference, and SOE decision-making.
- Investment climate: The fiasco could deter credible private investors and increase pressure on taxpayers if state funding fills the gap.
Mantashe said in March that while Gazprombank had not officially pulled out of the deal, US sanctions significantly affected its ability to continue with the mooted feasibility study.
“The mother body bank Gazprombank Russia was also under international sanctions, making Gazprombank Africa a risky partner, yet PetroSA, with the approval of cabinet, still went ahead with this deal,” Zondi said.
“The proposed internal investigation also must cover why it took so long to terminate the deal after it became clear Gazprombank Africa was not going to deliver on its financial obligations.”
Uncertainty over Mossel Bay reopening
A cloud of uncertainty now hangs over the prospects and timeline of the Mossel Bay plant’s reopening, which had been set for April next year.
The operation was previously capable of processing up to 45,000 barrels a day before it was put on care and maintenance in 2020 thanks to depleted offshore gas reserves.
In December 2023, cabinet announced that Gazprombank had been selected to refurbish the refinery at a cost of R3.8bn. Less than a year later, the US announced it would apply sanctions to the bank and its six foreign subsidiaries, including Gazprombank Africa.
The DA’s Zondi also criticised PetroSA’s decision to approach Infrastructure SA (ISA) as a potential new funder in Gazprom’s absence, calling on the state-owned enterprise to re-advertise the tender.
“There are many private sector partners who, under the right conditions, would fund this project without state intervention in the form of ISA. PetroSA is using ISA to save face whilst pretending something is being done to restart the Mossel Bay refinery,” he said.
Update: September 14 2025
The comment in this story has been updated with attribution toSphesihle Zondi, the DA’s deputy spokesperson on mineral and petroleum resources.
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