PetroSA posts record revenue for 2007/8

Revenue for the financial period was up 23% from R8.9 billion in 2007. The company also recorded a R1.8 billion after-tax profit.

Main contributors

High crude prices and a weaker rand were the main contributors to the high revenue levels.

There was also a significant increase in imported diesel re-sales, which make up 16% of gross revenue, which were required to augment the declining indigenous gas-fields' out-turn.

The 2008 tax year will be the first in which the oil company will submit its Income Tax Return based on the provisions of the Tenth Schedule of the Income Tax Act. The implementation of these rules has resulted in the company being in a tax paying position for the first time.

PetroSA continued its drive to effect sustainable transformation in the liquid fuels industry.

The company's Black Economic Empowerment procurement spend for the year amounted to 70% of total qualifying expenditure. Sales to BEE customers increased to 175 million litres in the 2007/08 period, from 80 million litres in the previous financial year.

Sustainability of Mossel Bay refinery

Looking ahead, the major challenge in the short to medium term is the sustainability of the Mossel Bay Refinery as indigenous reserves are reaching their end of life. A number of initiatives are underway to address this challenge including the drilling campaign, maximisation of the extent SCG and FA/EM fields and further exploration work in the rest of Block 9, including purchasing gas from other sources.

Vision 2020

The year under review also saw the development of South Africa's Energy Master Plan, which seeks to improve the security of supply of energy. The master plan mandates PetroSA to provide at least 30% of the country's crude oil needs by the year 2020.

In response PetroSA has conceptualised an aggressive growth strategy, called Vision 2020.

Sipho Mkhize, the President and CEO of PetroSA, said the Vision 2020 strategy was largely informed by the need to build a formidable and globally competitive oil company.

“As part of Vision 2020, the company investigated options for expanding South Africa's refining capacity. The two key refining options investigated were the coal-to-liquids (CTL) and a crude refinery. The CTL option's key attraction was the abundance of relatively cheap coal feedstock, and the opportunities it provided for the beneficiation of local resources,” Mr Mkhize said.

“However, this option has been placed in abeyance to allow key challenges such as water availability, carbon sequestration and other infrastructure requirements to be further investigated,” he added.

Project Mthombo

PetroSA has decided to embark on Project Mthombo, which seeks to establish a deep conversion, 400,000 barrels-per-day crude refinery at Coega, Port Elizabeth in order to meet expected growth in demand.

Skills competition

Other challenges during the 2007/08 financial year, was the perennial problem of global competition for skills in the engineering sector. The oil company is, however, confident that its' exciting portfolio of projects and individual growth opportunities, will continue to act as an incentive to attract and retain staff.

Challenge to broaden portfolio

“The corporate balance sheet remains strong but faces the challenge of diversifying from a single source asset base to a broad portfolio of revenue-generating assets,” Nkosemntu Nika, PetroSA's Chief Financial Officer said.

“The world is facing a debilitating financial crisis that will surely impact on South Africa.

“Despite this crisis PetroSA will, however, continue the drive for sustainable growth and will pursue with vigour the quest to entrench itself as a fully-integrated, globally competitive NOC,” he added.

During the year under review PetroSA experienced no adverse environmental or safety incidents.

Article published courtesy of BuaNews