SAPREF, South Africa’s largest oil refinery, is at the center of a controversial deal with CEF. Is it a clean energy transition or a return to dirty energy? Explore the facts and implications
Introduction to the SAPREF Refinery Acquisition and “Clean Break” Controversy
In May 2024, the Central Energy Fund (CEF) finalised a major acquisition of the South African Petroleum Refinery (SAPREF refinery), the largest in southern Africa, purchased from Shell and BP. This transaction was structured under a so‑called “clean break” doctrine — a legal manoeuvre that allowed Shell and BP to exit the deal entirely free of any future liabilities, including environmental clean‑up, decommissioning costs, and potential community class action suits. The fallout of this deal raises urgent questions about its financial viability, environmental responsibility, and alignment with global climate trends such as the rise of electric vehicles.
This extended analysis incorporates new evidence from consulting firms Mazars and CLG, alongside independent assessments by engineering firm Certis and legal experts, to examine how warnings were downplayed, decisions were influenced by corporate narratives, and the state and public may now shoulder major liabilities. We also scrutinise the broader context: the Just Energy Transition Investment Plan (JET‑IP), new energy vehicle (NEV) policies, and South Africa’s shifting energy landscape.
In May 2024, the Central Energy Fund (CEF) finalised a major acquisition of the South African Petroleum Refinery (SAPREF refinery), the largest in southern Africa, purchased from Shell and BP. This transaction was structured under a so‑called “clean break” doctrine — a legal manoeuvre that allowed Shell and BP to exit the deal entirely free of any future liabilities, including environmental clean‑up, decommissioning costs, and potential community class action suits. The fallout of this deal raises urgent questions about its financial viability, environmental responsibility, and alignment with global climate trends such as the rise of electric vehicles.
This extended analysis incorporates new evidence from consulting firms Mazars and CLG, alongside independent assessments by engineering firm Certis and legal experts, to examine how warnings were downplayed, decisions were influenced by corporate narratives, and the state and public may now shoulder major liabilities. We also scrutinise the broader context: the Just Energy Transition Investment Plan (JET‑IP), new energy vehicle (NEV) policies, and South Africa’s shifting energy landscape.
Consultant Contradictions: Mazars & CLG Advice on SAPREF Refinery Liability
Originally, in 2021, a comprehensive due diligence report by Certis Engineering estimated the decommissioning cost for the SAPREF refinery at approximately $374 million (around R6 billion at the time). This amount was only for the physical shutdown of the refinery — it did not even account for environmental remediation or cleanup. Legal assessments echoed this concern, stating that a clean break would be irresponsible and would shift these costs entirely to CEF.
However, after the devastating 2022 floods in KwaZulu‑Natal, which caused extensive environmental damage, Mazars and CLG issued a revised transaction advisory in 2023. Shockingly, their new estimate of total liabilities — including decommissioning, soil remediation, groundwater cleanup, and other environmental obligations — was lowered dramatically to just R1.6 billion. On paper, this reduction would enhance the refinery’s net asset value (NAV) and justify the clean break structure.
But this raises key questions: how could total liabilities drop to 25% of the 2021 standalone decommissioning estimate? No coherent explanation was provided. The gulf was so large that Mazars became reluctant to share their data, while Shell and BP provided no insight, citing confidentiality. CEF nevertheless proceeded — a move seen by many critics as ignoring critical risk indicators.
Stranded Asset Risk and the Just Energy Transition Ignored in SAPREF Deal
Global oil refining is now widely viewed as vulnerable to being stranded assets — investments that rapidly lose value due to technological shifts (like NEVs), updated regulations, and market changes. In South Africa, the Just Energy Transition Investment Plan (JET‑IP) prioritizes electrification, decarbonisation, and reduction of liquid fuel dependency.
Early due diligence for the SAPREF deal highlighted that a sudden shift to NEVs could severely depress demand for liquid fuels, risking the refinery’s long‑term viability. In sharp contrast, the 2023 transaction advice omitted these risks entirely. Instead, Mazars and CLG emphasised strategic fuel security and the potential to reduce reliance on imports — framing the refinery as an engine for national resilience, rather than a declining asset.
They cited unfounded figures — such as R45 billion GDP contribution and support for 85,000 jobs, despite the refinery having been shut down, underwater, and suffering mass retrenchments. The new narrative, however, aligned precisely with CEF’s internal goals and the strategic narrative of SANPC consolidation under Minister Gwede Mantashe.
Legal and Environmental Risk Warnings in the SAPREF Clean Break Deal
Even among its bullish claims, the 2023 advisory from Mazars and CLG did acknowledge serious risks — namely, class action lawsuits from affected communities. South Durban has endured decades of pollution, and Namibia’s R5 billion silicosis settlement in 2016 illustrated the magnitude of such claims.
Yet, Shell and BP were permitted to walk away without contributing to a liability fund. CEF was advised—albeit in a limited token—to obtain third‑party insurance or establish a catastrophic claims reserve. But no such fund or policy was put in place. This raises a troubling possibility: environmental justice claims could impose multi‑billion‑rand liabilities on CEF — and by extension, South African taxpayers.
The absence of mandatory remediation funding or insurance layers in the final Sale and Purchase Agreement constitutes a material risk — one entirely shifted from Shell/BP to CEF. That shift may prove extremely costly in years to come.
Who Are the Players? The Role of CLG and Its Political Connections in the SAPREF Deal
CLG (Centurion Law Group), though referred to as a legal firm, is unregistered with the South African Legal Practice Council. It operates as a pan‑African consulting firm specialising in oil and gas advisory — often aligned with lobby interests. Founded by the controversial NJ Ayuk, CLG shares address and leadership with the African Energy Chamber (AEC), headed by Ayuk himself.
The firm is deeply embedded in state energy policy circles. AEC’s advisory board includes figures like Nosizwe Nokwe‑Macamo, former CEO of PetroSA (2012–2015), and a current board member of the SANPC. Minister Gwede Mantashe appointed her in 2024. CLG advised CEF’s board at the same time that it assisted Mazars on PetroSA’s controversial UK–Gazprom deal, sparking serious conflict‑of‑interest concerns.
Public records show watchdogs like amaBhungane and Open Secrets investigated these overlapping advisory roles—particularly the notion that CLG was advising both state buyers and private bidders within the same transaction cycle.
Parallel Controversies: The PetroSA–Gazprom Deal and Mazars/CLG Involvement
In September 2023, Mazars (with subcontracted CLG support) conducted due diligence for PetroSA on a multi-million‑rand deal with Gazprom and businessman Lawrence Mulaudzi. Despite public evidence of potential corruption and lack of capital from Mulaudzi’s Equator Holdings, due diligence labelled him “low-risk.”
The deal collapsed in June 2024 after Equator failed to deliver promised funding. PetroSA’s internal audit alleges that CLG billed her time at R4,160/hour across two months, and that Mazars engaged in “double-dipping.” An audit letter demanded just over R1 million in refunds and questioned whether Mazars should be blacklisted from future state contracts. These accusations raise questions about governance oversight and tender processes — both of which were relevant to the SAPREF deal.
CEF Board Approval and the Political Imperative Behind the SAPREF Deal
The CEF board, led by Chair Ayanda Noah, was expected to guide a prudent acquisition. Instead, in April 2024, it swiftly approved the SAPREF purchase just one month after receiving Mazars/CLG’s revised advisory. Critics argue this timeline was too tight to allow for updated environmental audits or economic risk models.
The purchase coincided with the formation of SANPC — a merged entity including PetroSA, Strategic Fuel Fund, and iGas. By consolidating fossil‑fuel assets under one roof, the state signalled a pivot toward national oil control, perhaps at the cost of transparency. While petro-nationalism has strategic appeal, the rushed acquisition dilutes prudent due diligence.
Since the acquisition, talk of rehabilitating and expanding SAPREF to 600,000 barrels/day has circulated politically — but no tangible investment, clean-up, or construction has begun. In February 2025, the state reportedly reached out to partners like Sonangol (Angola) and Botswana Oil to fund the effort — indicating that CEF lacks the capital to proceed alone, underlining the fragility of the initial advisory assumptions.
Environmental and Public Health Fallout in South Durban Post‑SAPREF Acquisition
South Durban communities have long suffered from intense pollution: airborne sulfur, petroleum soot, and contaminated waterways. Independent studies show higher rates of asthma, respiratory illnesses, and lung cancer among local residents. The refinery’s acquisition, under a clean break, transfers all remediation responsibility to CEF — a public body with limited funds.
Without proper environmental impact assessments or financial reserves to cover long-term cleanup, residents may face extended exposure risks. The deal effectively prioritizes strategic oil autonomy over environmental justice — a troubling trade-off questioned by environmental NGOs and health advocates alike.
Major organisations, including the Groundwork environmental justice network and the South African National NGO Coalition (SANGOCO), have condemned the clean break. They argue that the deal fails to honor constitutional rights to clean air, water, and health — making a strong case for legal and civic oversight.
Conclusion and Future Outlook for SAPREF, CEF, and South Africa’s Energy Strategy
The SAPREF acquisition by CEF represents a high-stakes intersection of national energy policy, environmental responsibility, and corporate governance. The “clean break” structure — heavily supported by Mazars and CLG advisory — shifts billions in liabilities from Shell and BP onto the South African public. The deal also ignores global refocus on decarbonisation and risks turning SAPREF into a stranded asset.
Several urgent actions are needed:
- Commission independent environmental and health impact audits to assess remediation costs accurately.
- Establish a transparent liability fund or insurance mechanism to cover long-term cleanup and community claims.
- Reassess the economic justification in light of NEV adoption and declining global refinery demand.
- Involve civil society, local communities, and environmental justice groups in oversight — ensuring public accountability.
South Africa stands at an inflection point. It can choose to embrace a Just Energy Transition — or double down on ageing fossil‑fuel assets. The SAPREF deal could become a case study in misaligned incentives and techno-political risk. Unless the state reverts the ownership structure, strengthens liability provisions, and aligns with broader transition policies, the long-term costs—environmental, fiscal, and reputational—may far outweigh any short‑term gains.
For deeper background, explore: Part 1: CEF ignores red flags and gives Shell and BP a clean break
Mazars/CLG advisory in PetroSA‑Gazprom controversy
Table of Contents
- Introduction to the SAPREF Refinery Acquisition and “Clean Break” Controversy
- Consultant Contradictions: Mazars & CLG Advice on SAPREF Refinery Liability
- Stranded Asset Risk and the Just Energy Transition Ignored in SAPREF Deal
- Legal and Environmental Risk Warnings in the SAPREF Clean Break Deal
- Who Are the Players? The Role of CLG and Its Political Connections
- Parallel Controversies: The PetroSA–Gazprom Deal
- CEF Board Approval and the Political Imperative Behind the SAPREF Deal
- Environmental and Public Health Fallout in South Durban
- Conclusion and Future Outlook
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source: opensecrets.org.za
