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PRESENTATION TO PORTFOLIO COMMITTEE ON MINERALS AND ENERGY 18 May 2007

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.

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PRESENTATION TO PORTFOLIO COMMITTEE ON MINERALS AND ENERGY 18 May 2007

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  1. PRESENTATION TO PORTFOLIO COMMITTEE ON MINERALS AND ENERGY18 May 2007

  2. 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

  3. Brief Introduction of PetroSA Strategy • Security of Supply • BEE Objectives • SHEQ • Sipho Mkhize – President & CEO

  4. 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.

  5. 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

  6. Key Focus Areas & Strategic Objectives

  7. BEE Objectives • 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

  8. PetroSA’s SHEQ PERFORMANCE FOR THE YEAR 2006/2007

  9. 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.

  10. NOTES ON PERFORMANCE cont. • The world class HIV and AIDS programme. • No environmental incidents. • Successful shutdown

  11. BROAD BASED BLACK ECONOMIC EMPOWERMENT • Effective ownership of Enterprises by Black people • Encourages the sharing of equity and voting rights with black people and black women Ownership • Direct empowerment • Effective control of Enterprises by Black people • Encouragessenior black decision making at Executive Board and Senior Top management levels Management Control • Equity in the workplace Encourages companies to identify and recruit black people at professional, middle and lower management positions EmploymentEquity • Human • Resource Development Skills Development • 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. Preferential Procurement • Assist and accelerate the development and sustainability of other enterprises Encourages development or expansion of black small, medium enterprises particularly along the value chain. EnterpriseDevelopment • Indirect empowerment • 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 Socio-Economic Development

  12. PetroSA BEE Status Presentation • Employment Equity • Training and Development • Procurement • BEE • Corporate Social Investment • Nkosemntu Nika - CFO

  13. Employment Equity as at 31 March 2007

  14. Skills Development • 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

  15. 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

  16. 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

  17. 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.

  18. 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

  19. Discretionary Procurement (Per New BEE Codes)01 April 2006 to 31 March 2007 In terms of the new BEE codes, procurement from state organs, imported goods and services and sole branded products may be excluded

  20. 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

  21. BEE Performance: 2006/07

  22. BEE Strategy • 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

  23. 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

  24. 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

  25. 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.

  26. Corporate Social Investment CSI PILLARS AND FOCUS AREAS I N V E S T M E N T D O N A T I O N S S P O N S O R S H I P DISCRETIONARY DISCRETIONARY COMMUNITY DEVELOPMENT EDUCATION AND TRAINING HIV AND AIDS POVERTY ALLEVIATION

  27. 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)

  28. Progress on CSI • Committed over R50 million 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)

  29. Progress on CSI • Committed over R50 million 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)

  30. Budget Breakdown 2006/07

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