PRESENTATION TO
PORTFOLIO COMMITTEE ON MINERALS
AND ENERGY
18 May 2007
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Brief Introduction of PetroSA
Strategy
•Security of Supply
•BEE Objectives
•SHEQ
Sipho Mkhize – President & CEO
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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.
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Key Focus Areas & Strategic Objectives
Key Focus Areas
Exploration for
feedstock and
non-feedstock
Current & Planned Initiatives
Strategic Objectives
Place primary focus on gas
projects in Southern Africa.
Diversifying from
the MOU
Developing
related
infrastructure
Zambesi
Namibia gas: block 1711
West coast
Ibhubesi
GTL & COD
Commercialisation
Temane,
Mozambique gas:
Delta, Rovuma Basin
Sustaining
PetroSA’s
Business
gas
exploration:
Strategic
Purpose
√
Expected
Costs R’m
4 400
√
Kudu,
1 200
√
4 000
Selectively develop
opportunities to access gas or
crude in other parts of the world
Production and acquisition
Develop projects to enhance
GTL commercialisation efforts.
Tinhert integrated project
√
5 000
Develop projects to enhance
COD commercialisation efforts.
Development of company COD.X2.
√
100
Enter the retail and commercial
market.
Retail entry
√
BEE
√
√
4 700
Place PetroSA at the forefront
of the next refining facility.
CTL or crude refinery
√
17 000
Biodiesel refinery
√
1 000
Building / Upgrading of related
infrastructure to handle projects
West coast pipeline: from Oranjemund to
Coega.
2 600
√
Storage and SBM at Durban or Richards
Bay
√
500
Crude & Product storage in Saldhana &
Milnerton
√
1 500
LPG, LNG and white product storage at
Coega
√
2 300
VLCC & CNG Ships
√
1 500
27 800
45 900
TOTAL COSTS R’m
18 100
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
PetroSA’s SHEQ PERFORMANCE FOR THE YEAR
2006/2007
MARCH
06
SHEQ/BUSINESS PROCESS
(KPI)
Actual 06
0
Fatalities
0.38
Disabling Injury Frequency
Rate (DIFR)
Target
06/07
Actual
06/07
0
0
< 0.35
0.279
> 88.7
> 94
HIV and AIDS rollout (2007
includes wellness
programme!)
%
Shutdown SHEQ preparation
Progress
%
Didn’t
apply
100
100
Quality Certification:
ISO9001:2000
%
40
100
97
0
0
Environmental
79
0
COLOUR LEGEND
MARCH 07
Colour
code
COLOUR
DENOTES
RED
Serious
matter,
resolve
urgent
BRIGHT
GREEN
Caution,
take action
BLUE
doing well,
keep it up!
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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.
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
NOTES ON PERFORMANCE cont.
•The world class HIV and AIDS programme.
•No environmental incidents.
•Successful shutdown
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Resource Development
Human
Direct empowerment
BROAD BASED BLACK ECONOMIC EMPOWERMENT
Effective ownership of Enterprises by Black people
Ownership
Management
Control
Employment
Equity
Skills
Development
Indirect empowerment
Preferential
Procurement
Enterprise
Development
Encourages the sharing of equity and voting rights with black people and black women
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 Microenterprises, >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
Socio-Economic
Development
Encourages initiatives intended to directly provide black people who are natural persons
with means of generating income for themselves
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
PetroSA BEE Status Presentation
•Employment Equity
•Training and Development
•Procurement
•BEE
•Corporate Social Investment
Nkosemntu Nika - CFO
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Employment Equity as at 31 March 2007
M/F Ratio
100:0
90:10
17
339
79:21
2
49
736
78:22
0
0
8
0
8
6
0
72
8
80
273
0
1368
368
1736
70:30
1
7
1
2
8
2
108
44
16
101
37
10
6
115
216
12
231
56
55
63
0
294
134
428
118
0
379
103
482
1
0
30
3
33
10
0
350
31
381
44
0
139
68
207
31
0
96
21
117
White
1
20
Indian
Coloured
African
White
Indian
Female
Total
Top Management
Senior Management
Professionally qualified, experienced
specialists and mid management
Skilled technical, academic qualified, junior
management, supervisors, foreman,
superintendents
Semi-skilled and discretionary decision
making
Unskilled and defined decision making
TOTAL PERMANENT
Non- Permanent employees
TOTAL
Coloured
Occupational Level
African
Male
77:23
74:26
76:24
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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.
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Discretionary Procurement (Per New BEE Codes)
01 April 2006 to 31 March 2007
Rm
Percentage
476
39.3%
36
3.0%
BEE
496
41.0%
Other (BEE companies < 25%)
202
16.7%
1 210
100%
White Owned
Listed Companies
Total
In terms of the new BEE codes, procurement from state organs, imported
goods and services and sole branded products may be excluded
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
BEE Performance: 2006/07
BEE Element
Equity ownership
Management & control
Employment equity
PetroSA
Actuals
Target
25%
80%
SOE
EXEMPTED
89%
60:40
73:27
3%
Corporate Social
Investment - Residual
25%
Oil
Industry Position
50 + 1 Black Top
Management
60%
No Information
Avaliable
No Information
Available
53:47
9.54% of
payroll
3% of payroll
2.05% of payroll
35%
41%
70%
2.4%
R10 Million
R14 Million
(2%) of EBITDA
-
R50 Million
(3%)
R31.1 Million
(3%)
3% of Net Profit
0.86% of Net
Profit
Skills development
Preferential
procurement
Supplier Development
Programme Enterprise
Development
DTI
Generic Score Card
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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.
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Corporate Social Investment
CSI PILLARS AND FOCUS AREAS
D
O
N
A
T
I
O
N
S
DISCRETIONARY
S
P
O
N
S
O
R
S
H
I
P
DISCRETIONARY
I
N
V
E
S
T
M
E
N
T
COMMUNITY DEVELOPMENT
EDUCATION AND TRAINING
HIV AND AIDS
POVERTY ALLEVIATION
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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)
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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)
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
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)
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07
Budget Breakdown
2006/07
65.73%
70.00%
60.00%
50.00%
40.00%
19.70%
30.00%
20.00%
10.00%
8.59%
2.76%
3.21%
0.00%
Poverty Alleviation
Community Development
Sponsorship & Donations
Education & Training
HIV & Aids
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07