1. Presentation to the Portfolio Committee for Minerals and Energy
Mr Sipho Mkhize President & CEO PetroSA
Cape Town, 18, October 2006
The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07

2. Outline Overview PetroSA Corporate Objectives Feedstock Update
LTFT Technology Update
Security of Supply
Global Safety Record
HIV Aids
BEE
Imvume
Challenges
Financial Results

3. About PetroSA
South African national oil company, 100% government owned
Operate the world’s largest and one of the only three GTL plants worldwide
Accumulated unique GTL experience for the past 14 years and operating know-how, which it is in the process of commercialising
GTL commercialisation has been an activity within PetroSA since 2001 and has since become one of the strategic priorities for the company.
Operates the strategic crude storage tanks in Saldhana
Oil/Gas producer in SA and Nigeria (OML114/Abana field)
Is active across the value chain (in both upstream and downstream)
An international player with African focus

4. PetroSA Operations Division
Mission of
PetroSA Operations Division
“We will deliver sustainable growth through maximisation of cash flow from PetroSA’s assets with our people, delivering operational excellence underpinned by world class SHEQ practises in partnership with our customers and local communities.”
Find a Balance between
Efficiency and commercial drive of IOC
Mindset of NOC - deliver more than profit!

5. PetroSA’ Experiences: GTL supports macroeconomic development
Employment : direct and indirect
Training and Development of Skills in Process Industry
Supplier Development: Services, Maintenance, Materials
Support of Transformation: Black Economic Empowerment
Opportunities for Small & Medium Enterprise Development
Tax revenues other than Royalties for raw materials
Improves security of supply – direct through GTL products or via swaps with external markets with different specs
Opens access to local Downstream Market: Trading, Marketing
Anchor inland customer for development of Gas Infrastructure and Inland Market: Commercial, Gas to Electricity, Private Households, Chemicals
Input in Government to Government negotiations in developing countries: support of regional development
GTL Technology offers more than just export of raw materials

6. Overview
PetroSA has had a successful year in many aspects of its business. A solid growth platform for the future has been laid following the successful restructuring of the organization.
The business is now buoyant, our people are feeling upbeat and confident, and the circumstances of our industry all contribute to a positive outlook.

7. Outline Overview PetroSA Corporate Objectives Feedstock Update
LTFT Technology Update
Security of Supply
Global Safety Record
HIV Aids
BEE
Imvume
Challenges
Financial Results

8. Corporate Objectives Implement South Coast Gas project by 2008
Secure feedstock for the Mossel Bay plant beyond 2012.
Replace non-feedstock production and build reserves to maintain a non-feedstock production rate of more than barrels of oil equivalent per day, with a reserve life of at least 8.5 years by 2010
GTL Refinery to achieve a sustainable break-even target by 2010 that will ensure a long term affordable feedstock supply.
Complete development phase II of LTFT GTL by October 2007 and develop opportunities to commercialize technology.
Meet new fuel specifications, as per legislation, in the future.
Commercially manage Government strategic stocks and associated tankage.
Enter the downstream marketing of liquid fuels.

9. Outline Overview PetroSA Corporate Objectives Feedstock Update
LTFT Technology Update
Security of Supply
Global Safety Record
HIV Aids
BEE
Imvume
Challenges
Financial Results

10. Feedstock Update
Secure feedstock for the Mossel Bay plant beyond 2008 and invest in related infrastructure
Successfully implement the South Coast Gas Project by May 2007
Recommend a long term feedstock alternative

11. Feedstock Update - Cont
Continue/accelerate exploration activities in South Coast
Continue to pursue strategic participating interest in upstream gas producing assets offshore West and East Coast of Southern Africa.
Lead the development of gas infrastructure on the West Coast.
Engage key stakeholders to secure support for the pipeline project.
Obtain approval for a single gas buyer business model from the Energy Regulator to underpin the financial viability of pipeline.
Investigate and develop alternative options – contingency
Underground coal gasification
CNG
Coal bed methane
Imported LNG
Develop worst case scenario options:
Conversion to crude refining, Mossel Bay, Saldanha, Coega.
Abandonment

12. Feedstock Update - Cont
Optimistic/preferred
2007 – 2011: Gas from FA/EM and South Coast Gas Project
2011 – 2015: Other South Coast Gas
2012 onwards: Piped West Coast Gas &/or CNG from Mozambique
Fall back option (insufficient South Coast gas)
2009 – 2012: Gas for 2-train operation from FA/EM and SCG Project
2015 onwards: Piped West Coast Gas, or CNG from Mozambique and/or Namibia, and/or West Coast
Importation of LNG – Coega or Saldanha
Pessimistic
Abandonment, or crude conversion 2011 (for latter – decision required latest mid 2008)

13. Feedstock Update - Cont
PetroSA aspires to drive gas commercialisation in Southern Africa, preferably with other NOC’s, to ensure:
Maximum mutual benefit
Regional cooperation and development
Focus on downstream beneficiation of indigenous gas
Efforts concentrated on Namibia, South Africa and Mozambique.
PetroSA to lead the development of gas utilisation infrastructure – Gas Transmission Pipeline, CNG, or LNG.
PetroSA engaging Key Stakeholders to secure support

14. Feedstock Update - Cont
PetroSA is to develop additional fields in the South Coast Gas development known as the Bredasdorp Basin.
The project is fully in execution phase and is on track for first gas intake in May 2007.

15. Outline Overview PetroSA Corporate Objectives Feedstock Update
LTFT Technology Update
Security of Supply
Global Safety Record
HIV Aids
BEE
Imvume
Challenges
Financial Results

16. LTFT Technology Update
The Low Temperature Fischer-Tropsch (LTFT) Semi Commercial plant in Mossel Bay was designed and constructed through an agreement with Statoil, the Norwegian State-Owned national oil company.
A technology company, GTL.F1 AG has been established, with an additional engineering partner, Lurgi, to house and further develop and market the LTFT and integrated reforming technology, MegaSyn.
The objective is to operate the plant at conditions as close as possible to the expected commercial conditions, with a view of conducting a catalyst life test, a limited process variable study as well as a tracer study.
There is a marked change to the progress being made in the global GTL business. The main players, Sasol, Shell and Exxon Mobil, are all developing large GTL projects.

17. LTFT Technology Update -Cont
A JV Project with Statoil
Major Components
$60+ million investment
EPC Contractor Technip Italy S.p.a.
Ready for commissioning March 2004
Catalyst supply Johnson Matthey Catalysts
Technology concept proved end 2005
Slurry Bubble Column Reactor
Cobalt catalyst
Proprietary filter
Compressor, Membrane unit
Instrumentation and data capture
LTFT Semi- Commercial Plant

18. LTFT Technology Update -Cont
The Algerian Government has invited PetroSA to bid on a b/d integrated GTL project (Tinrhert).
Sep. 2005, PetroSA submitted a technical proposal in a consortium with Statoil and BHP Billiton.
A commercial bid is scheduled for submission in Sep along with competitors, Sasol, Chevron and Shell.

19. LTFT Technology Update -Cont
Target
900 million barrels of oil equivalent
PetroSA share 135 mil barrels eq (15% share)
Aligned with PetroSA reserve target
Supply PetroSA European markets
Commercialise GTL technology
Deploy new LTFT technology
Demonstration underway in South Africa
Competitive Bid
Technology
Only 3 qualified bidders
GTL experience: largest worldwide
Partners: Statoil and BHP Billiton
Capex Commit.

20. Outline Overview PetroSA Corporate Objectives Feedstock Update
LTFT Technology Update
Security of Supply
Global Safety Record
HIV Aids
BEE
Imvume
Challenges
Financial Results

21. Security of Supply West / East coast gas pipeline
Coega storage and loading facilities
Participation in a CTL / Refinery study
Exploration and driling operations in RSA coastal waters
LNG receiving terminal
Total Capital Expenditure for these projects in the next 5 year at R15 billion

22. Proposed Gas Transmission Pipeline
Touwsrivier
222 km
Saldanha
Cape Town
Port Elizabeth
Mossel Bay
Bit
terfontein
Hopefield
Swellendam
George
Joubertina
Oudtshoorn
Coega
Worcester
Calvinia
Beaufort West
Uitenhage
Oranjemund
NAMIBIA
SOUTH
AFRICA
KEY
541 km
163 km
290 km
445 km
125 km
LANGKLOOF
OVERBERG
CAPE TOWN
BREEDE RIVER
WEST COAST 2
WEST COAST 1

23. Proposed Aggregator Model
Producer 1
Producer 2
Producer 3
Producer 4
LNG & CNG
Onshore Wholesale Gas Trader
Local Distribution Co.
Major
Industries
Eskom
GTL
plant
Gas Flow
Transmission pipeline
Gas Sales & Purchase Agreements
Transportation Agreement

24. Outline Overview PetroSA Corporate Objectives Feedstock Update
LTFT Technology Update
Security of Supply
Global Safety Record
HIV Aids
BEE
Imvume
Challenges
Financial Results

25. Global Safety Record The GTL refinery in fact exceeds the benchmark.
PetroSA has undertaken an international benchmarking exercise which shows all our operations are easily within the bracket for world best practice
The GTL refinery in fact exceeds the benchmark.
Among other highlights was the achievement in December 2005 of a total 6.45 million hours without a disabling injury at the GTL refinery.
The company’s quality certifications with the International Standards Organisation (ISO 9001/2000 and ISO 14001) were not only retained, but extended to cover additional areas that met the certification requirements.

26. Outline Overview PetroSA Corporate Objectives Feedstock Update
LTFT Technology Update
Security of Supply
Global Safety Record
HIV Aids
BEE
Imvume
Challenges
Financial Results

27. HIV and Aids
A case study on the remarkable HIV and AIDS programme rolled out in PetroSA was conducted.
Key success areas within a six-month period were:
79.4% of employees had attended awareness session
64% had undergone voluntary testing.
The programme has already had a positive impact on the local community in Mossel Bay, which has requested PetroSA’s help with a similar community-wide initiative.

28. Outline Overview PetroSA Corporate Objectives Feedstock Update
LTFT Technology Update
Security of Supply
Global Safety Record
HIV Aids
BEE
Imvume
Challenges
Financial Results

29. BEE To pursue economic growth through the seven (7) elements of BBBEE
Employment equity (70:30)
Skills development (5% of payroll)
Preferential procurement (40%)
Management & control (89%)
Supplier Development Programme - Enterprise Development: Established five companies (5) & spent about R 10 Million towards the development
Corporate Social Investment - Residual: (over the three year period spent R50.1 Million

30. BEE Supplier development
PetroSA piloted a successful Supplier Development Programme over two years
South African Supplier Development Agency was launched in September 2005.

31. BEE Skills transfer and development
Two graduate students were sponsored for international MSc programmes in Reservoir Engineering to address the shortage of skills in that area.
Ten other students have commenced petroleum studies abroad with sponsorship from PetroSA.
PetroSA welcome the Department of Trade and Industry’s (DTI) National Initiative for Partnership Programme (NIPP), in terms of which, foreign companies doing business in South Africa are obliged to provide reciprocal benefits in respect of training.
PetroSA has made huge advances at its Centre of Excellence in Mossel Bay. This Centre serves as an industry model and will make a significant contribution to the planning and smooth execution of the statutory maintenance shutdown of the GTL refinery scheduled for October 2006.

32. Outline Overview PetroSA Corporate Objectives Feedstock Update
LTFT Technology Update
Security of Supply
Global Safety Record
HIV Aids
BEE
Imvume
Challenges
Financial Results

33. Imvume Transaction Two public-interest investigations were conducted
R18 million condensate transaction with Imvume Management.
The standing committee on public accounts (SCOPA) recommendations were:
- Risk assessment procedures be strengthened
- Regular report-backs be made to SCOPA.
- PetroSA’s risk management function has been established as a separate function within the Office of the CEO.

34. Imvume Transaction - Cont
A court settlement agreement was signed with Imvume in August 2005
Since then good progress has been made in the collection of the advance payment made to Imvume during early 2004.
At 31 March 2006, repayments of R9.5 million had been received in terms of the settlement agreement.
Interest raised on the outstanding amount is R4 million, resulting in the total outstanding debt at 31 March 2006 being R12.5 million.
Since May 2006, Imvume has defaulted on the settlement agreement.
In August 2006, our lawyers were instructed to execute the settlement, by attaching assets.

35. Outline Overview PetroSA Corporate Objectives Feedstock Update
LTFT Technology Update
Security of Supply
Global Safety Record
HIV Aids
BEE
Imvume
Challenges
Financial Results

36. Challenges Slow decision process Foreign investment approvals
Conversion to new order rights uncertain
Upstream fiscal uncertainty
Shortage of technical and operational skills

37. Outline Overview PetroSA Corporate Objectives Feedstock Update
LTFT Technology Update
Security of Supply
Global Safety Record
HIV Aids
BEE
Imvume
Challenges
Financial Results

38. Financial Results 2005/6
With this year’s performance, further progress has been made within a positive global market context for GTL technology and products over the coming decade. Aggressive commercialisation of GTL know-how and the development of value-added products should bring PetroSA into the mainstream of global demand and diversify the income stream. The national growth outlook is good, with the economic fundamentals firmly in place.
We expect to make further advances in all areas of our business, including a successful refinery maintenance shutdown, possible E&P acquisitions in Namibia and Mozambique, and successful commissioning of the South Coast Gas project. I look forward to reporting back to stakeholders next year.

39. The graphic below shows the relationship between the rand/dollar exchange rate, the crude oil price and profitability of the company.
Permanent workforce demographic profile
31 March 2006

40. Performance Review 2006 2005 Change R’m R’m % Income Statement
Turnover
Operating profit
Net profit
Balance Sheet
Total assets
Total debt (27)
Net asset value
Cash generated (16)

41. Revenue Variance 2006 2005 Change R’m R’m R’m
Turnover
Average ZAR / USD R6.38 R %
Average crude oil price $58bbl $42bbl %
Analysis R’m
Price variance
Volume variance (1 500)
Exchange variance
1 063

42. Ration Analysis % % Gross Margin 40.9 39.1
% %
Gross Margin
Cost to revenue ratio
Return on assets
Gearing
Liquidity Current ratio excl. cash 1.55 : : 1

43. Thank You