PetroSA is well ahead of budget

Oct 25, 2004 02:00 AM

PetroSA was well ahead of budgets for the first six months of its financial year but was having to consider its own retail outlets or new take-off agreements because of the growing reluctance of oil companies to buy its synthetic oil, acting Central Energy Fund (CEF) CEO Ayanda Mjekula said.
The CEF is the holding company of PetroSA and other state-owned oil and gas operations, all of which faced substantial financing requirements last year as the group entered a period of major expansion.

Mjekula was briefing the portfolio committee on minerals and energy on the CEF's recently released annual report for the year to the end of March 2004. On PetroSA, which operates the oil and gas deposits off the east coast near Mossel Bay, Mjekula said that it was having to plan ahead for a major cash flow threat as the gas deposits off Mossel Bay, which feed the oil-from-gas plant, neared depletion in 2007 and new supplies had to be secured.
Major investments would be required to expand exploration and development activities, but bedding down these could be hampered by the "lack of an acceptable dividend policy" and exchange control regulations that inhibited foreign investment in upstream activities.

PetroSA's half-year performance in September showed profit slightly up on budget at R 772 mm and total sales strongly up on budget at R 2.8 bn, mainly due to the higher prices achieved for locally produced oil products.
Some oil companies had, however, indicated that they no longer wanted to buy fuel from PetroSA as they could source their requirements elsewhere. It might have to consider its own retail outlets or exports, he said.

Another major capital investment facing the group was funding subsidiary iGas's plans to take up the state's 25 % stake in the gas pipeline from Mozambique to South Africa at a cost of about R 534 mm. Luckily, local and international banks were satisfied that the project was viable and were keen to support it. Another R 500 mm would be needed for the integrated LNG plant to power the Coega and other development projects in the Eastern Cape.
Mjekula said that subsidiary Ocpsa, a section 21 company involved in pollution control, was considering commercialising its activities and becoming a leading player in the field at home and abroad, especially in the oil-rich Middle East.

Source: Business Report
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