Minerals and Energy Portfolio Committee Mpumelelo Tshume MD / CEO 22 February 2019

The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd 22 February 2019

Delivery Vision and strategic objectives Performance Budget 2003/2004 Inform the Portfolio Committee on PetroSA’s: Vision and strategic objectives Business and challenges Performance Budget 2003/2004 22 February 2019

Structure of presentation Section 1 : Vision and overview of current business Section 2 : Strategic objectives Section 3 : Business performance 2002/2003 Section 4 : Budget 2003/2004 Section 5 : Corporate Governance Section 6 : Challenges and conclusion 22 February 2019

Vision and Overview of current business Section 1 22 February 2019

Vision To be a leading African energy company, competing globally in an environmentally reponsible manner, to the benefit of stakeholders. 22 February 2019

Overview Merger of Soekor, Mossgas and certain activities of SFF Business strategy informed by: Energy White Paper (1998) Business Plan and Corporate Governance review report sanctioned by Cabinet in May 2001 Wholly state-owned Separate legal entity under Companies Act Mandated to manage all commercial assets of state in the petroleum industry 22 February 2019

Overview (continued) Managed on sound commercial business principles Forecasted turnover for 2002/2003 financial year - R5.6 billion. Forecasted profit after tax and before dividends for 2002/2003 financial year - R1.6 billion. Sound balance sheet to raise financing for major capital projects Book value of assets at end March 2003 - R12.2 billion Employs approximately 1 200 people 22 February 2019

Overview (continued) Supply approximately 7% of total South African refined product - Mossel bay GTL plant Oil production from Southern Cape offshore approximately 15 000 barrels per day Chemical exports - R600 million per annum World’s largest commercial natural gas to transportation fuels plant Sasol licence agreement limitations Participation in international upstream petroleum ventures 22 February 2019

FA Platform 100 km south of Mossel Bay 220 m high 105 m water depth 9 direct wells, 3 satellite wells 7 wells by remote control through EM buoy

Strategic Objectives Section 2 22 February 2019

Corporate Strategic Thrust – Exploration and Production Division Exploring, developing and producing gas reserves on a commercial basis to supplement feedstock to Manufacturing refinery Intensify investment in the upstream sector of value chain by focusing on Africa Optimising production and current operations to generate cash flow for current and future developments 22 February 2019

Corporate Strategic Thrust – Manufacturing Division Optimising production and current operations to generate cash flow for current and future developments Evaluating alternative sources of feedstock to Manufacturing refinery Reduce Manufacturing cost base over next 18 months to achieve a R720 million saving per year 22 February 2019

Corporate Strategic Thrust – Trading, Supply and Logistics Expanding product range into higher-value chemicals and new environmentally compliant fuels Develop and grow international sales by growing market share in existing customer base and extending sales regions already served Optimisation of logistics in consideration of broad strategy to supply 30% of fuel products to BEE companies Product trading and hedging to penetrate markets for oil offtakes as well as to minimise exposure 22 February 2019

Corporate Strategic Thrust – Corporate Planning and New Ventures Extending position in value chain to wholesale and retail marketing Commercialise and exploit gas to liquids (GTL) know-how Develop Pipeline infrastructure along West Coast Investigate national refinery capacity expansion Enter LNG, Methanol, down stream petrochemicals businesses via partnerships and synergistic acquisitions 22 February 2019

Corporate Strategic Thrust – Support Functions Ensure access to world-class support services, systems and practices in pursuit of operational excellence Ensure functional systems support empowerment of teams and individuals Implement competency development programs to retain, develop and attract human capital 22 February 2019

Corporate Strategic Thrust – Transformation Black Economic Empowerment Achieve Employment Equity in line with Policy: 60 : 40 Develop: Skills and Capacity in line with commercial focus Corporate Social Investment Strategy and Funding Plan Policy, targets and procedures to promote affirmable procurement Facilitate the development of suppliers Promote Equity participation by black owned companies in our businesses Achieve a commercially orientated culture change 22 February 2019

Business Performance 2002/2003 Section 3 22 February 2019

Summary of salient points 2002 2003 % change Net income before tax ( R mil) 1 171 1 646 41 Net income before dividend for the year (R mil) 1140 1646 44 Opex to revenue(%) 62 59 (5) Total liabilities : total assets (%) 51 45 (12) Cash retained from operations(R mil) 2609 2 243 (14) Debt – Equity (%) 46 35 (24) Sales volumes ( m3) 2 000 336 3 219 522 61 22 February 2019

Business Performance 20002/2003 Implementation of merger completed Entered into three upstream participation agreements in Gabon, Algeria and Nigeria Oil production better than expected from Oribi and Oryx oil fields (Oribi: produced 25 million barrels vs expected 11 billion barrels; Oryx: produced 9 million barrels vs expected 4.5 million barrels) GTL manufacturing plant achieve 1 million hours without disabling injuries Good progress in securing gas feedstock for GTL manufacturing plant Ibhubesi gas fields Block 9 gas fields Kudu gas fields 22 February 2019

Business Performance 20002/2003 (continued) Entered into numerous Memorandums of Co-Operation and Memorandums of Understanding with NOC’s, IOC,s and Governments Refocused marketing efforts for petrochemical products internationally reaped significant monetary benefits Commissioning of LAD/LAK 1 project, increase petrochemicals production by 70 000 tons per year. Gross revenue added of $30 million per year. 22 February 2019

Business Performance 2002/2003 (continued) Initiate social development programs in Mossel Bay and Limpopo Province Implement progressive HR policies and set R115 million aside for training and skills development over next three years Significant progress to achieving representative demographic profile Contract of R750 million for procurement of condensate awarded to BEE company Financial performance from Finance outstanding. 22 February 2019

Business Performance 2002/2003 (continued) Staff by Race 22 February 2019

Business Performance 2002/2003 (continued) Top Management 22 February 2019

Business Performance 2002/2003 (continued) Staff by race, gender and designated groups 22 February 2019

Business Performance 2002/2003 (continued) BEE discretionary expenditure R100 Million Target (16% of Opex) for 2002-2003 22 February 2019

BEE- Current and future initiatives Projected BEE Procurement expenditure for 2003-2004 is R200m (Estimated 30%) 25% of all staff will be female 1% of all staff will be disabled individuals 60% of staff will be from the designated group and 40% non-designated by 2004 (By level and division) R6m will be spent on supplier development programme Establishing a forum to discuss opportunities between black business, established suppliers and PetroSA 22 February 2019

BEE- Current and future initiatives (continued) R50m will be spent on CSI-targetting education, poverty alleviation, community development and enterprise development, including the registration of PetroSA Trust 9% interest in Sable Oil field to be sold to HDSA groupings by mid year 2003 PetroSA is funding the Vukani initiative to train 450 women intrepeneurs from 9 provinces, and 30 Process Controllers Partnerships being established with SABS and CHIETA and other state owned organisations to promote enterprise development 22 February 2019

Women And Disabled Groups BEE- Current and future initiatives (continued) Women And Disabled Groups PetroSA is introducing new BEE reporting parameters effective April 2003: Black women owned enterprises, Black disabled owned enterprises, Black empowered enterprises, Black enterprise 50,1% with preference for 100% black owned enterprises To date PetroSA has spent R12m on six Black women owned enterprises, Zero expenditure on Disabled owned enterprises. 22 February 2019

Budget 2003/2004 Section 4 22 February 2019

Summary 2003/4 Budget Employment equity 60:40 Gender equity 25% Black economic empowerment (R mil) 200 Sales growth 11% Productivity improvement 13% Return on shareholders funds 13% Net profit before tax(R mil) 878 Net profit after tax (R mil) 878 22 February 2019

Income statement Rand millions 2002 2003 2004 2005 2006 Sales 5 281 5 592 5 830 6 436 7 805 Cost of sales (1 714) ( 2 379) (2 517) (3 093) (3 327) Fixed operating costs (1 564) (2 173) (2 697) (2 559) (2 313) Interest received 278 353 186 216 411 Interest paid - pure (1 408) (156) (154) (136) (100) Revaluation - loans 298 407 230 (169) (331) Taxation (31) Net profit before tax 1171 1646 877 695 2145 Proceeds from sale of assets 650 55 22 February 2019

Salient ratios of financial plan 2002 2003 2004 2005 2006 Net operating margin 40% 39% 36% 32% Interest cover 1 7 6 ROACE 18% 21% 20% 19% Debt / equity 46% 35% 23% 28% 51% 22 February 2019

Investments required in the future ( 2003/4) R millions Manufacturing 367 E & P 1 383 Other 13 Gross total Capex 1 762 22 February 2019

Corporate Governance Section 5 22 February 2019

Corporate Governance Compliance a high priority Compliance required to following main acts / regulations: Public Finance Management Act Treasury regulations South Aftican Reserve Bank regulations Close working relationship with regulatury bodies essential to ensure quick decision making and approval process Opportunity to add 3.3 million barrels of oil to reserve base lost 22 February 2019

Challenges and Conclusion Section 6 22 February 2019

Challenges Expand business along the industry value chain, with retail as main priority Secure long term gas feedstock for GTL manufacturing plant Progress GTL commercialisation projects to ensure commisioning of first full scale plant not later than 2009 Commissioning of SABLE oil field in 2nd quarter of 2003. Will add 12 million barrels to oil reserves. Expected capital cost of $ 86 million Successful shutdown during 2nd quarter of 2003.Expected cost of R171 million, margin impact of R220 million 22 February 2019

Challenges (continued) Migration to unleaded fuels Create a culture and value system aligned to our commercial objectives Skills enhancement to create required capacity Consolidation of business architecture- systems and policies Achievement of transformation objectives, especially BEE Corporate Governance compliance Meaningful contribution to NEPAD objectives 22 February 2019

Conclusion The business strategy of PetroSA is based on achieving and contributing to following shareholder objectives: Achieve a competitive commercially viable company on a sustained basis Active along the full value chain of the petroleum, oil, gas and petrochemical sectors Achieve transformation on a continuous basis, with focus on BEE delivery Up skill of staff and industry capacity building 22 February 2019

Thank you 22 February 2019