OWN CORRESPONDENT, Cape Town | Tuesday 10.45am
GOVERNMENT announced on Monday that it is to merge its gas exploration company Mossgas and oil exploration company Soekor into a commercial venture with an expected market capitalisation of over $2-billion.
Announcing the restructuring, Minerals and Energy Minister Phumzile Mlambo-Ngcuka said that the new entity will focus on exploration and production of oil and natural gas and converting those into fuels and chemicals at its Mossel Bay plant in the Western Cape. She said the company will report to the Central Energy Fund.
Earlier this year the minister approved the restructuring of the balance sheets of Mossgas and Soekor — both owned by the CEF — to better reflect their underlying values.
“The new company is expected to show strong cash flows which will provide both the ability to pay dividends to CEF as well as provide a basis for expansion and growth,” Mlambo-Ngcuka said. The merger will form part of a reorganisation of the CEF group of companies, refocusing its activities in the oil and gas sector. The reorganisation is set to be completed by June next year.
The CEF will maintain overall control of the group, and a chief executive would be appointed. A chief executive will also be appointed for the new merged commercial operation, the statement said.
The possibility of a shakeup in the oil industry was first raised in 1997 by then Minerals and Energy Minister Penuell Maduna. He said that the government was considering setting up a single company to control its oil interests, a state vehicle to expedite the process of moving local businesses into the South African Development Community. The company would consist of Sasol, Mossgas, the Strategic Fuel Fund, Petronet, Soekor and its 20% stake in Engen, he said.