the petroleum oil and gas corporation of south africa (pty) ltd reg. no. 1970/008130/07 presentation...

The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07

PRESENTATION TO PORTFOLIO COMMITTEE ON MINERALS

AND ENERGY

18 May 2007


AGENDA

10h00 – 10h15 Welcoming and opening remarks by the President and Chairperson of PPC

10h15 – 11h15 Brief Introduction of PetroSA Strategy – Mr Mkhize

11h15 – 11h45 PetroSA BEE status Presentation – Mr Nika

11h45-12h00 Chairperson and Members comments

12:00 – 13:00 LUNCH (executive dining room 2)

Closure


Brief Introduction of PetroSA Strategy

•Security of Supply

•BEE Objectives

•SHEQ

Sipho Mkhize – President & CEO


Security of Supply

The issue of security of supply is based on two elements:

•normal daily energy requirements, and,•averting crisis situations.

Security of supply has its dependence on:

•Access to feedstock•Storage of crude and white product as reserves•Access to oil & gas infrastructure and logistics•Role of sustainable alternate forms of energy.


As the national oil company….

PetroSA is to be major player in the development of the energy sector. It can achieve this by two means:

•by maximising the value of national energy resources, and, •assume leadership in energy sector development.

PetroSA is in a position to •secure oil and gas supply through development and ownership of local and international reserves •develop related domestic/regional infrastructure and logistics•commercialise its GTL and COD technologies•create local opportunities that meet national requirements


Key Focus Areas & Strategic Objectives

45 90027 80018 100TOTAL COSTS R’m

1 500√VLCC & CNG Ships

2 300√LPG, LNG and white product storage at Coega

1 500√Crude & Product storage in Saldhana & Milnerton

500√Storage and SBM at Durban or Richards Bay

2 600√

West coast pipeline: from Oranjemund to Coega.

Building / Upgrading of related infrastructure to handle projects

1 000√Biodiesel refinery

17 000√CTL or crude refineryPlace PetroSA at the forefront of the next refining facility.

Developing related infrastructure

√BEE4 700

√Retail entryEnter the retail and commercial market.

Diversifying from the MOU

100√Development of company COD.X2.Develop projects to enhance COD commercialisation efforts.

5 000√Tinhert integrated projectDevelop projects to enhance GTL commercialisation efforts.

GTL & COD Commercialisation

4 000√Production and acquisitionSelectively develop opportunities to access gas or crude in other parts of the world

1 200√

West coast gas exploration: Kudu, Ibhubesi

√Namibia gas: block 1711

4 400√

Mozambique gas: Temane, ZambesiDelta, Rovuma Basin

Place primary focus on gas projects in Southern Africa.

Exploration for feedstock and non-feedstock

Expected Costs R’m

Strategic Purpose

Sustaining PetroSA’sBusiness

Current & Planned I nitiativesStrategic ObjectivesKey Focus Areas

45 90027 80018 100TOTAL COSTS R’m

1 500√VLCC & CNG Ships

2 300√LPG, LNG and white product storage at Coega

1 500√Crude & Product storage in Saldhana & Milnerton

500√Storage and SBM at Durban or Richards Bay

2 600√

West coast pipeline: from Oranjemund to Coega.

Building / Upgrading of related infrastructure to handle projects

1 000√Biodiesel refinery

17 000√CTL or crude refineryPlace PetroSA at the forefront of the next refining facility.

Developing related infrastructure

√BEE4 700

√Retail entryEnter the retail and commercial market.

Diversifying from the MOU

100√Development of company COD.X2.Develop projects to enhance COD commercialisation efforts.

5 000√Tinhert integrated projectDevelop projects to enhance GTL commercialisation efforts.

GTL & COD Commercialisation

4 000√Production and acquisitionSelectively develop opportunities to access gas or crude in other parts of the world

1 200√

West coast gas exploration: Kudu, Ibhubesi

√Namibia gas: block 1711

4 400√

Mozambique gas: Temane, ZambesiDelta, Rovuma Basin

Place primary focus on gas projects in Southern Africa.

Exploration for feedstock and non-feedstock

Expected Costs R’m

Strategic Purpose

Sustaining PetroSA’sBusiness

Current & Planned I nitiativesStrategic ObjectivesKey Focus Areas


•Achieving Black (Including women) ownership to at least 25% in all operations of the liquid fuel and gas petrochemical

•Increase the number of black people, including woman, to have ownership and control of enterprises in the liquid fuel industry

•Focus on meaningful and relevant skills development

•Develop and increase black participation in the liquid fuel industry’s supply chain

•Ensure Socio Economic Development (formerly CSI) spend on sustainable projects and programmes

BEE Objectives


PetroSA’s SHEQ PERFORMANCE FOR THE YEAR 2006/2007

SHEQ/BUSINESS PROCESS(KPI)

MARCH 06

MARCH 07

Actual 06 Target 06/07

Actual 06/07

Colour code

Fatalities0

0 0

Disabling Injury Frequency Rate (DIFR)

0.38< 0.35 0.279

HIV and AIDS rollout (2007 includes wellness programme!)

% 79 > 88.7 > 94

Shutdown SHEQ preparation Progress

%Didn’t apply

100 100

Quality Certification: ISO9001:2000

% 40 100 97

Environmental 0

0 0

COLOUR LEGEND

COLOUR DENOTES

RED Serious matter, resolve urgent

BRIGHT GREEN

Caution, take action

BLUE doing well, keep it up!


NOTES ON PERFORMANCE

The financial year 2006/2007 was a great success from the SHEQ perspective based on the following reasons:

•No fatalities were experienced in the organisation.

•The disabling injury frequency rate (DIFR) was 0.279 against a stretch target of less than 0.35. This performance includes the injuries suffered during the shutdown. Despite the fact that at some stage, more than 3500 new people were at the operating plants during the shutdown, the safety performance has been superb. During the shutdown ONLY 2 disabling injuries were experienced. All in all, 11 injuries were suffered throughout the organisation.


NOTES ON PERFORMANCE cont.

•The world class HIV and AIDS programme.

•No environmental incidents.

•Successful shutdown


Dir

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Hu

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Resou

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Develo

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Ind

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Ownership

Management Control

Preferential Procurement

EnterpriseDevelopment

EmploymentEquity

Skills Development

Socio-Economic Development

Effective control of Enterprises by Black people

Encourages senior black decision making at Executive Board and Senior Top management levels

Equity in the workplace

Encourages companies to identify and recruit black people at professional, middle and lower management positions

Development of competencies of Black employees

Encourages companies to develop black talent through spending on skills development, overseas placement and learnerships

Procurement of Goods and Services from strong B-BBEE recognition level suppliers

Encourages to procure from BEE compliant companies. Encourages spend on Small and Micro-enterprises, >50% Black owned companies and >30% Black Women owned companies.

Assist and accelerate the development and sustainability of other enterprises

Encourages development or expansion of black small, medium enterprises particularly along the value chain.

Promote access to the economy for Black people

Encourages initiatives intended to directly provide black people who are natural persons with means of generating income for themselves

Effective ownership of Enterprises by Black people

Encourages the sharing of equity and voting rights with black people and black women

BROAD BASED BLACK ECONOMIC EMPOWERMENT


PetroSA BEE Status Presentation

•Employment Equity

•Training and Development

•Procurement

•BEE

•Corporate Social Investment

Nkosemntu Nika - CFO


Employment Equity as at 31 March 2007

Afr

ican

Col

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Indi

an

Whi

te

Afr

ican

Col

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d

Indi

an

Whi

te

M/F

Rat

io

Top Management 1 1 100:0Senior Management 7 1 2 8 2 20 90:10Professionally qualified, experienced specialists and mid management 108 44 16 101 37 10 6 17 339 79:21Skilled technical, academic qualified, junior management, supervisors, foreman, superintendents 115 216 12 231 56 55 2 49 736 78:22Semi-skilled and discretionary decision making 63 118 1 10 44 31 0 6 273 70:30Unskilled and defined decision making 0 0 0 0 0 0 0 0 0TOTAL PERMANENT 294 379 30 350 139 96 8 72 1368 77:23Non- Permanent employees 134 103 3 31 68 21 0 8 368 74:26TOTAL 428 482 33 381 207 117 8 80 1736 76:24

Tota

l

Occupational Level

Male Female


56 Bursaries offered to HDSA in disciplines:

• Engineering

• Geophysics and Geology

• Marketing and Accounting

Scholarships: External:

11 Students on Scholarships (5 Female and 6 Male)

• Texas Tech University

Petroleum Engineering – 6

• Houston University

Geophysics – 4

• Imperial College

MSc Petroleum Engineering – 1 Employee

Skills Development


Partnerships

• PetroSA in conjunction with the University of Cape Town and

Houston University, have established a Masters Programme in

Petroleum Geophysics. PetroSA is sponsoring the 17 students

admitted on the programme

• Establishing a geo-science Professorship at Wits and Fort Hare

University

Leadership in Oil and Energy

• 10 PetroSA employees enrolled for the SAPIA initiated leadership

programme which is provided by WITS University

Skills Development


Skills Development

NIPP Project

PetroSA has an agreement with Allseas and Subsea7

Companies to train 45 employees on critical skills over

three years as part of the two companies’ fulfilling the National

Industrial Participation Programme. 3 people completed

training with Subsea7 and 6 are currently on training


Skills Development

Secondments

Pioneer:

20 employees will be seconded to Pioneer (Texas) to

undergo training in various disciplines over 18 months

Period

Lurgi:

2 Process Engineers will be sent to Lurgi for 2 years for

training

Sud Chemie & Johnson Matthey:

Secondment of employees as and when required.


Skills Development

1033 Employees trained for:

• Management Development

• Technical Training

• Supervisory Training

• Other skills programme

Centre of Excellence

COE Accredited Trade Testing Centre for the WCP

Expanding the centre to accommodate more trainees

Planned to train 3700 learners by 2010

Current trainees 335

80 Learners will graduate this year with NQF level 4

Awaiting accreditation for ABET and Entrepreneuship

training


Discretionary Procurement (Per New BEE Codes)01 April 2006 to 31 March 2007

Rm Percentage

White Owned 476 39.3%

Listed Companies 36 3.0%

BEE

Other (BEE companies < 25%)

496

202

41.0%

16.7%

Total 1 210 100%

In terms of the new BEE codes, procurement from state organs, imported goods and services and sole branded products may be excluded


Supply Development Programme

Successes Achieved

• Five companies were identified for this programme

• Developed 94 shareholders; (9% women)

• Created more than 120 permanent jobs

• Generated R72.4m since inception

• Demonstrated sustainability and profitability


BEE Performance: 2006/07

PetroSA DTI Oil BEE Element Target Actuals Generic Score Card Industry Position

Equity ownership 25% SOE

EXEMPTED 25% No Information

Avaliable

Management & control 80%

89%

50 + 1 Black Top

Management No Information

Available

Employment equity 60:40

73:27

60% 53:47

Skills development 3% 9.54% of

payroll

3% of payroll 2.05% of payroll

Preferential procurement

35%

41%

70% 2.4%

Supplier Development Programme - Enterprise Development

R10 Million

R14 Million

(2%) of EBITDA -

Corporate Social Investment - Residual

R50 Million (3%)

R31.1 Million (3%)

3% of Net Profit 0.86% of Net Profit


To pursue economic growth strategy through the seven elements of BBBEE as informed by;

•Liquids Fuel Charter

•Broad Based Black Economic Empowerment Act No 53 of 2003

•Codes of Good Practice on BBBEE

BEE Strategy


Trade,Supply & Logistics

Trade,Supply and Logistics Division:

BEE Activities in Trading 06/07

• All Condensate was purchased from BEE until August 06.

• Out of 14 cargoes of crude oil, 7 were sold to BEE. (52% of R1,2 billion)

• Reformate has been purchased from BEE at a value of R94 million

• Bought two import cargoes of Mogas and Diesel for the shutdown cover. BEE company did the shipping


Trade,Supply & Logistics

Trade,Supply and Logistics Division:

BEE Trading Forecast

• Two cargoes of Condensate were committed to BEE company and expect the first cargoe in June 07

Value, Approx. R840 million

• Reformate – expect more BEE involvement but experiencing challenges as a result of global shortages.

• Reformate purchases commitment to BEE is valued at R126 million and plan to increase purchases to R680 million

• Crude Oil Sales (R653m)– expect more than 50% of sales to BEE

• R193m product sales sold through BEE companies


Interventions

• Identify black owned & controlled enterprises to participate in our projects, partnerships and Joint Ventures

• Appoint talented black women for senior managerial positions.

• Ensure 40% women representation at all employment levels

• Appoint disabled people

• Develop black suppliers through SDP and Enterprise Development

• Working with our technology partner to identify and develop companies to supply professional and technical services on our GTL projects.


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DDOONNAATTIIOONNSS

DDOONNAATTIIOONNSS

CSI PILLARS AND FOCUS AREASCSI PILLARS AND FOCUS AREASCSI PILLARS AND FOCUS AREASCSI PILLARS AND FOCUS AREAS

EDUCATION AND TRAININGEDUCATION AND TRAININGEDUCATION AND TRAININGEDUCATION AND TRAINING

COMMUNITY DEVELOPMENTCOMMUNITY DEVELOPMENTCOMMUNITY DEVELOPMENTCOMMUNITY DEVELOPMENT

Corporate Social InvestmentCorporate Social InvestmentCorporate Social InvestmentCorporate Social Investment

HIV AND AIDSHIV AND AIDSHIV AND AIDSHIV AND AIDS

POVERTY ALLEVIATION POVERTY ALLEVIATION POVERTY ALLEVIATION POVERTY ALLEVIATION

DISCRETIONARYDISCRETIONARYDISCRETIONARYDISCRETIONARY DISCRETIONARYDISCRETIONARYDISCRETIONARYDISCRETIONARY


Progress on CSI

Committed over R50 million on CSI

Building of a new Combined School in Saldhana (R15m)

Hall, Media Centre and two Classrooms at Percy Mdala in Ksyna (R3m)

Establishment of Computer and Science laboratories at schools across the Eastern

Cape (R10m)

Building of a Phamarcy at St Mary’s Hospital (R2.4m)

Provision of facilities at 4 Clinic’s in E. Cape (R2m)

Cleaning-up of the Tweekuilen River In Mosselbay (R500 000)

Establishment of Youth Development Centre at Winterberg Trust School in

Queenstown (R1m)


Progress on CSI


Contribution towards flood disaster in Mosselbay (R500 000)

Provision of Skyball Court to 120 Schools in the Western and Southern Cape

(R1.1m)

Training of Educator’s in Mathematics, Science and Technology in the four identified

provinces (R2m)

Partnership with Dept of Social Welfare to implement the Golden Games Project

(R1.4)

Establishment of a Science Laboratory as well purchasing 2 mobile classroom at

Thandokhulu High school in Mowbray

(R700 000)


Progress on CSI


Establishment of a Science Laboratory at Ikamvalethu High School in

Langa and a Computer laboratory and library at Thembelihle High

School in Khayelitsha. A joint venture between PetroSA and our

contractor Subsea7 (R500 000)

Purchase of Gastro Equipment for a female HIV ward at Somerset

Hospital (R100 000)

Purchase a mobile X-Ray machine which will be used extensively for

trauma patients and to detect secondary diseases such as TB in

HIV+ patients at Khayelitsha SiteB hospital.

(R600 000)


Budget BreakdownBudget Breakdown 2006/07 2006/07

2.76% 3.21%8.59%

19.70%

65.73%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

Poverty Alleviation Sponsorship & Donations HIV & Aids

Community Development Education & Training

the petroleum oil and gas corporation of south africa (pty) ltd reg. no. 1970/008130/07 presentation...

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