1. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 An African energy company PRESENTATION TO THE PORTFOLIO COMMITTEE ON MINERALS AND ENERGY Presented by Dr Popo Molefe and Mr Sipho Mkhize None - Executive Chairman and President & CEO, PetroSA

2. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Agenda Introduction Shareholder Objectives Salient Predetermined Objectives Major Challenges Way Forward Financial Performance

3. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Introduction to PetroSA National upstream and downstream petroleum corporation International player with African focus Established 2002 through merger of State oil E&P company (Soekor) 1969 and GTL company (Mossgas) 1987 Current business  Exploration, oil and gas production  GTL manufacturing - SA  Oil and chemicals trading

4. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 The business strategy for PetroSA is based on achieving and contributing to the following shareholder (Government) objectives: PetroSA to achieve sustained commercial viability PetroSA to achieve transformation on a continuous basis. Operating PetroSA in line with best international practices with regard to Safety, Health, Environment, Quality. To contribute to the macro-economic objectives of the country. Shareholder Objectives

5. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Salient Predetermined Objectives Financial viability and sustainability SHEQ Employment Equity Black Economic Empowerment Corporate Social Investment

6. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Salient Predetermined Objectives Favourable operating environment Steady plant performance Sable field performing above expectations Oribi / Oryx producing beyond original estimates Macro economic environment Higher international oil prices Rand strengthening against the Dollar Declining interest rates Operational Environment

7. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Financial results Revenue growth – 19% increase Operating Margin – 20% increase Profit before tax – 80% increase Cost containment Lower Gearing Strong liquidity Financial Viability Salient Predetermined Objectives

8. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Salient Predetermined objectives Financial viability SHEQ Employment Equity Black Economic Empowerment Corporate Social Investment

9. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Salient Predetermined objectives Retained all ISO accreditations Obtain a NOSCAR platinum award for the seventh time Orca achieves 2 756 days without disabling injury FA platform wins Excellence in Mining and Environmental Management award for the second year ZERO fatalities and Environmental spills HIV/Aids programme roll out SHEQ

10. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Salient Predetermined objectives Financial viability SHEQ Employment Equity Black Economic Empowerment Corporate Social Investment

11. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Salient Predetermined objectives 1 263 employees Achieved 69:31 employment equity against a target of 60:40 19 % comprise women and aggressive target of 35% set for 2005/6 First female shift supervisor appointed at the refinery Appointed female Process Controller at the offshore platform Employment Equity

12. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Salient Predetermined objectives Financial viability SHEQ Employment Equity Black Economic Empowerment Corporate Social Investment

13. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Salient Predetermined objectives R804 million comprising 34% (Target of 50% not achieved) R14 million allocated for supplier development Five companies included in the pilot phase creating 98 jobs Centre of Excellence produced over 300 graduates in various trades such as electricians, welders, riggers, fitters etc. Black Economic Empowerment

14. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Salient Predetermined objectives Financial viability SHEQ Employment Equity Black Economic Empowerment Corporate Social Investment

15. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Salient Predetermined objectives PetroSA Development Trust capitalised by R55 million to focus on: > Education and Training > Health > Empowerment of women Flagship Projects assisted by the Trust are Protec Limpopo Online Project Computer Laboratories in Limpopo and KwaNonqaba Construction of schools in Mossel Bay and Limpopo Corporate Social Investment

16. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Major Challenges Major cash flow stream of PetroSA under threat as FA/EM gas supply to Manufacturing plant depleted by 2007 Secure long-term feedstock supply to Manufacturing plant on a commercial viable basis Uncertainty exists as to total investment required to secure feedstock for Manufacturing plant Expand E& P asset base aggressively

17. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Major Challenges Financing of projects by utilising strength of balance sheet limited due to short period of secured cash flow generation from current operations Streamlining of internal business processes Supply agreements and retail markets  Supply agreement/MOU with other petroleum companies is limited to 3 years.  PetroSA has no access to the retail market and is therefore always dependent on, and sometimes held to ransom by, the competition in terms of its supply agreements.

18. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Way Forward Finalise evaluations as to optimal feedstock solution for Manufacturing plant and associated investment required as matter of urgency Pursue aggressive growth in E & P asset base, organically and non-organically

19. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 FINANCIAL PERFORMANCE 31 MARCH 2005

20. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Economic Indicators 2004/52003/42002/3 Average crude oil price$42.10/bbl$28.97/bbl$27.58/bbl Average R/$ exchange rate6.287.209.82 Impact on profit: $1 change in priceR124mR92mR164m R1 change in exchange rate ?R436mR33mR382m

21. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07

22. Abridged Income Statement 2004 R’m Gross Revenue3 473 Operating Profit/(Loss)(396) Net Investment Income636 Taxation (1) Profit after taxation 239 2005 R’m 6 446 1 715 137 (115) 1 737 Volume variance 1 614 Oil Price variance 1 648 Exchange rate var (650) Subsidiary sales 361 Total Sales Variance 2 973 Increased Revenue 2 973 Condensate (116) Provisions (514) Shutdown 270 Other Expenses (262) Subsidiary expenses (240) Operating Profit Change 2 111

23. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Abridged Balance Sheet 200520042003 R’m Assets Non-current assets4 4455 3855 791 Amounts held by holding company 1 594 Current Assets1 5842 2911 366 Cash and cash equivalents 5573 2 637 2 973 13 19611 90711 724 Equity and liabilities Capital and reserves9 2337 5037 359 Long-term loans-shareholder3129581 481 Non-current provisions2 8472 4612 142 Current liabilities 804 985 742 13 19611 90711 724

24. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Abridged Cash Flow 200520042003 R’m Cash generated by operating activities4 053271801 Cash utilised in investing activities(288)(382)67 Loans repaid (830) (224)(2 006) Increase in cash and cash equivalents2 935(335)(1 138) Cash and cash equivalents at beginning of year 2 6382 973 4 111 Cash and cash equivalents at end of year 5 5732 6382 973

25. The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd Reg. No. 1970/008130/07 Discussion