Petrol Oil Sector Who Owns Who in South Africa

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Essential Essen tial Business Information

WEBSITE: WWW.WHOOWNSWHOM.CO.ZA R EG EG NO: 1986/003014/07

MANUFACTURE OF PETROL AND LUBRICANTS Siccode 332

February 2012

COMPILED BY: Guy McGregor [email protected] DIRECTORS: M AUREEN MPHATSOE (CHAIRPERSON), JIM FICK (EXPERIAN), GLEN BALS (EXPERIAN), A ), A NDREW NDREW MCGREGOR (M ANAGING)

© Copyright Who Owns Whom (Pty) Ltd

Manufacture of Petrol and Lubricants Siccode 332 & 63500

Contents

Contents 1

INTRODUCTION

1

2

DESCRIPTION

1

3

SIZE OF THE INDUSTRY

6

3.1

Oil Companies

6

3.2

Refineries

7

3.3

Lubricant Blending Plants

8

4

STATE OF THE INDUSTRY

10

4.1

Local

10

4.1.1

Regulations

13

4.1.2

BEE

19

4.2

Regional

19

4.3

International

21

5

SWOT ANALYSIS

21

6

FUTURE OUTLOOK

22

7

ASSOCIATIONS AND REFERENCES

23

APPENDIX 1

24

Typical Refinery Operation

24

Coal to Liquid Fuels Synthetic Refining Process

25

Natural Gas to Liquid Fuels Synthetic Refining Process ORGANOGRAM

25 26

COMPANY PROFILES

28

BLUE CHIP LUBRICANTS (PTY) LTD CHEVRON SOUTH AFRICA (PTY) LTD

28 29

DEOJAY PETROLEUM KZN (PTY) LTD

31

ENGEN PETROLEUM LTD

32

FUCHS LUBRICANTS (SOUTH AFRICA) (PTY) LTD

35

GERM AFRICA (PTY) LTD

37

H AND R SOUTH AFRICA (PTY) LTD INDY OIL SA (PTY) LTD

38 40

KZN OILS (PTY) LTD

42

LUBRITENE (PTY) LTD NATIONAL PETROLEUM REFINERS OF SOUTH AFRICA (PTY) LTD

44 46

PETROLEUM MARKETING ORGANIZATION (PTY) LTD

48

PETROLEUM OIL & GAS CORPORATION OF SOUTH AFRICA (PTY) LTD, THE PISTON POWER CHEMICALS CC

50 53

SASOL WAX (DIVISION OF SASOL CHEMICAL INDUSTRIES LTD)

55

SHELL & BP SOUTH AFRICAN PETROLEUM REFINERIES (PTY) LTD SPANJAARD LTD

57 59

TOTAL SOUTH AFRICA (PTY) LTD VALVOLINE SOUTH AFRICA (PTY) LTD

62 64


Manufacture of Petrol and Lubricants

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1

INTRODUCTION

The Liquid Fuels sector is a sophisticated one, with the only commercial synthetic coal-to-liquid fuel refinery in the world and a distribution infrastructure meeting the challenges of a large country with an industrial heartland six hundred kilometres from the coast. This report explores the downstream and upstream value chain of the South African Oil industry, which contributes around 2% of Gross Domestic Product (GDP). The report also examines the distribution of refined petroleum products across the 1.2 million square kilometres that comprise South Africa. The Liquid Fuels Industry is at an interesting stage with the existing refineries operating at capacity with economic growth catching the Industry off guard, in that demand is stretching supply. As a result, new distribution and refining capacity is needed sooner than expected.

2

DESCRIPTION

No significant reserves of crude oil have been discovered in South Africa, or its territorial waters, despite a sustained search by Soekor, the state-owned oil exploration company, established in 1965. Limited natural gas deposits, and small oil fields, have been discovered off the South coast. According to the most recent statistics, nearly 80% of South Africa’s crude oil is imported through the single buoy mooring (SBM) system off the coast of Durban. Shell, BP, Sasol and Engen own the SBM, which is managed by SAPREF, the country’s largest oil refiner. The remainder of the crude oil imports are landed at Saldana Bay and piped to the Caltex refinery in Cape Town.

Primary Sources of Crude Oil - 2010

Major Sour ces of Cr ude Oi l (2010)

Ir an Saudi Ar abi a Niger ia Angol Angol a Unit ed Ar ab Emir at es Arg Argent ent ina Ir aq Spai n Swit zer land Cot e d' Iv oir e Oman Mozambi que Nor way Unit ed St at es of Amer ica Equat or i al Gui nea Cuba T OT AL Source: South African Revenue Services


000' of metric tons 5528 4584 3594 3409 3409 1018 297 297 244 134 126 88 72 44 37 36 35 9 19255

% of total 29% 24% 19% 18% 18% 5% 2% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 100%


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Refining involves the procurement of crude oil and refining it, so that a range of final petroleum products is produced. It is the first component of the downstream segment of the oil industry value chain and the most capital intensive. The diagrams in Appendix 1 illustrate the different refining processes. The refined products typically comprise the following six groups as shown in the table below.

RSA Crude Oil Refinery Yield Data Group

Main Products

Gases

LPG

Light Distillates

Petrol

Middle Distillates

Paraffin

2.9

Jet Fuel

6.7

Residuals

% of the Barrel

2.0 30.5

Diesel

31.7

Fuel Oil

13.0

Bitumen

2.0

Other

5.0

Fuel and Loss

6.2

Currently there are six private sector oil companies and seven brands. These can be classified into three categories. ♦

The first category consists of the five large brands, Engen, Shell, Chevron, Total and BP, whose individual share of the petroleum market varies between 13% and 30%. They also own refineries.

♦

The second category comprises the independent wholesalers. These are largely Black Empowerment Companies which are not branded but who distribute refined product mainly in the Central, Eastern and North Eastern parts of South Africa to their customers. However this is not a significant amount of product at this stage.

♦

The third category of oil companies is the synfuel industry, comprising two companies, Sasol and PetroSA. PetroSA is primarily a refiner, producing petroleum products to be marketed by the other oil companies, through their service stations and their corporate, farmer and government customers. However Sasol markets refined products through a significant network of service stations it has built up since the termination of the Main Supply Agreement in 2003. The two basically use different inputs: Sasol uses coal and PetroSA natural gas, to produce petroleum products. The synthetic fuel industry supplies around 35% of South Africa’s refined product requirements.

The synfuel industry produces more Gases and Light Distillates than the crude oil refiners. This helps meet petroleum product demand, as more petrol than diesel is sold in South Africa. As Sasol shares the crude oil refinery, Natref, it is able to produce a more balanced barrel of refined



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petroleum products. However, this is not the case with PetroSA, which does not provide a crude equivalent saving.

Sasol Synfuel Refinery Yield Data Group

Main Products

% of the Barrel

Gases

LPG

4,0

Light Distillates

Petrol

65,0

Middle Distillates

Paraffin

5,0

Diesel

26,0

The Lubricants market is a different segment of the Liquid Fuels Industry. While the mainstream Liquid Fuels Industry petroleum products produce hydrocarbons which principally facilitate movement in some sort of combustion engine or provide light or heat, the main task of a lubricant and grease is to protect moving parts. Lubricants are primarily made from base oil which comes from the fuel oil distillation at the bottom of the crude oil yield in the refining process, after which additives are inserted for the lubricant at the lube oil blending plants to meet the required specification for the various applications. The lubricants market consists of two parts, automotive and industrial, with the former making up approximately 6 0% of the sales and the industrial market comprising the balance of 40%. The to tal market in South Africa is around 400 million litres.

The other components of the downstream value chain are the distribution and marketing of refined products. The 1953 bottle-necks on the Durban-Reef supply chain resulted eventually in a 700km pipeline, 30.5cm in diameter being constructed in order to transport the refined product to the Reef. It was commissioned in 1965 and is used to transport petrol, diesel, kerosene and naphtha. The products are pumped to eight pipeline terminals from where they are transported by rail and road to their final destination.

The different oil companies, including Sasol, market petroleum products throughout the country. To improve efficiencies and prevent transport duplication, products are exchanged between oil companies in certain areas. The Durban refineries (Enref and SAPREF) normally supply the Natal area, Free State, neighbouring states as well as parts of the Cape Province. Chevref supplies most of the Cape Province, whilst Sasol and Natref supply the Inland Area of Gauteng, Limpopo, North West and Mpumalanga.

Refined products are distributed through around 55 oil company depots throughout South Africa. They receive the products via the Durban/Reef pipeline in Natal, the Free State and the Inland Area, with road and rail transport extending the distribution chain to other depots. The products are then transported to their final destination: service stations, farms, mines, corporate or government customers, by road and rail tanker. Due to the inefficiencies of the rail system, 85% is transported



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by road. Transnet controls the pipelines and the cost of moving refined products from the coast inland is based on Transnet rail tariffs.

There are now four pipelines from Durban at the coast to the inland areas: ♦

The product pipeline referred to above;

♦

A crude oil pipeline to supply Natref with its crude oil feedstock;

♦

A third pipeline through Richards Bay, which currently brings the methane-rich gas from Sasol’s Secunda Synthetic plants to customers on the coast; and

♦

The New Multi Products Pipeline (NMPP) which is taking the place of the previous product pipeline from the coast to the inland areas. and it is currently being fully commissioned

The marketing of refined product is done in the following two ways:

♦

indirectly through service stations (Oil Company Retail Stream); and

♦

directly to farmers, mines, corporate customers, government or third party distributors (Oil Company Commercial Stream). This stream comprises the wholesale activities of the Oil Industry.

There are some 4173 retail service stations in South Africa which sell petrol, diesel and lubricants as well as IP and even LPG in some cases. In the case of petrol, prices are controlled by government at the level of pump prices, while there is a maximum price for diesel and IP at the wholesale price level. Lubricant prices are not controlled. No discounting of service station petrol pump prices is allowed. Service stations may not be run directly by oil companies. The dealers are paid a service station dealer margin of 85.2 cents per litre which amounts to 7.9% of the 95 unleaded inland pump price as at November 2011 on top of the oil company wholesale price, to enable them to run the service stations.

The retail sector of the value chain has very different characteristics to other parts of the value chain. There used to be as many as 4900 retail service stations in South Africa in 2000. As at 2008 as mentioned above, this number dropped to 4173 as the oil companies rationalised their retail site networks and withdrew particularly from rural areas where sales turnover has been low. Logistics costs in supplying these far-flung sites were also high.

There are broadly three different levels or types of service stations operating in the local market varying from high volume, value add service stations with fast food outlets, convenience stores and car wash facilities to the lowest volume service stations. The types of service stations will vary with location (McGregor, Peddie, Warnett, Jawoodeen, Said, 2009).

♦

Urban Sites tend to be high-pumpers with high volumes sold and vary according to location

and traffic flows. Additional income is earned through car-washes and convenience stores and fast food restaurants. The investment costs range between R5m and R10m. Costs are largely



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driven by the price paid for the land. Motor repair workshops are generally not found at these service stations as this service facility is provided by the motor dealership.

♦

Rural Sites tend to be lower pumpers than urban sites. Most of the rural service stations have

motor repair shops as part of their operations. The convenience stores concept has not taken off in the rural areas because the needs of the consumer tend to be met by general dealers. Also the low concentration of people in the rural areas would adversely impact on the viability of convenience stores. Capital cost would be much lower than the urban sites because of lower cost of land and limited facilities on the site. Investment in rural service stations would range between R1m and R3m.

♦

Transient / Highway service stations are a relatively recent concept that has been

introduced in the market. It is a high investment business with an initial capital investment of between R20m and R30m. It caters for both light (Motor cars) and heavy vehicles (Trucks). The convenience store and restaurants are integral parts of the transient service stations. The concept of overnight hotels/motels is also being introduced. This is a seasonal business meaning high through flow occurs during the h oliday seasons.

The ownership of the branded sites differs and falls into four main classes.

♦

Dealer owned / Dealer operated

Here the service station is both owned and operated by the owner. The owner would have a branding, product supply and marketing support agreement with an oil company.

♦

Oil company owned / Dealer operated

As the oil companies in terms of government regulations are not allowed to operate the service stations the site owned by them are leased to private operators. In terms of the lease they are obliged to purchase their supplies and marketing support from the oil company owning the service station.

♦

Property developer owned / Oil company leased / Dealer operated

In recent times oil companies have leased sites developed by Property Developers. The property is leased to oil companies on a long-term basis. The operation of the site is then subleased to private operators.

♦

Oil company owned / Oil company operated

In terms of the regulatory framework oil companies are allowed to own and operate a maximum of one site per province for training and business development purposes.



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The Oil Industry Supply/Activity Chain

Oil Industry value chain Upstream Sector

n o i t a r o l p x E

t n e m p o l e v e D

n o i t c u d o r P

Downstream Sector

n o i t a t r o p s n a r T

g n i n i f e R

n o & i t y l u p b p i r u t s S i D

g n i d a r T

e l a s e l o h W

o t r g s n e i t s e u k r d a n e M

The downstream oil sector comprises all aspects of the oil industry from oil refining to filling petrol into a motorist’s tank on a service station forecourt or an overhead tank on a farm. The upstream sector in comparison comprises identifying oil fields, drilling for oil and shipping crude oil to refineries. The crude oil industry in South Africa can only be defined as downstream as South Africa currently has no reserves of crude oil. However the synthetic oil industry of coal to refined petroleum products and natural gas to refined petroleum products comprises the full value chain, but rather than locating and exploiting crude oil, these refineries use coal and natural gas.

3

SIZE OF THE INDUSTRY

The Liquid Fuels sector, which manufactures petrol, diesel and fuel oil as its primary outputs, produced over 28 700 million litres of refined product in South Africa in 2009. This was down from 35 300 million litres in 2008. This is done through six refineries. Four are crude oil refineries and two are synthetic refineries which convert natural gas and coal into refined petroleum products. The six refineries have a capacity of just over 700 000 barrels per day with the crude oil refineries consuming around 20 million metric tons of crude oil per annum. This compares to a world consumption around 3 900 million metric tons, which puts South African consumption at 0.5% of the global total.

3.1

Oil Companies

The South African crude oil industry is dominated by foreign owned multinationals which have all been proactive in seeking local Black Economic Empowerment partners to comply with the Oil Industry Charter. The synthetic fuel industry is locally owned, by Government in the case of PetroSA, while Sasol is listed on the Johannesburg and New York Stock Exchanges.



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Companies and Controlling Shareholding in the Oil Industry RSA Company

Owner

% Ownership

Refinery Used

Chevron

Chevron

100%

Chevref

Engen

Petronas

80%

Enref

WAIH

20%

Shell

Royal Dutch/Shell

100%

50% of SAPREF

BP

BP plc

75%

50% of SAPREF

MIC

15%

WDB

10%

TotalFinaElf

50,1%

Rembrandt

24,9%

Tosaco

25%

Sasol Ltd

100%

Total

Sasol Oil

36% of Natref

Sasol Synthetic Fuels, 64% of Natref [Source: SAPIA]

3.2

Refineries

The Mobil refinery, the first in South Africa, was completed in January 1954 and is located in Wentworth, Durban. Now renamed Enref, it is 69% the size of the SAPREF (the BP/Shell refinery).

SAPREF, jointly owned by BPSA (50%) and Shell (50%) is also located in Durban and is the biggest refinery in Southern Africa. It came on stream in October 1963. According to the website, the refinery: ♦

“processes 24 000 tons of crude oil a day;

♦

makes 10 main products in 46 different grades; and

♦

produces 2.7 billion of petrol” per annum.

Natref, the inland refinery at Sasolburg is jointly owned by Sasol and Total.

Chevref, the Chevron refinery, is located in Cape Town at the request of Government. The initial plan was to locate it in Durban. It is 56% of the size of SAPREF and when it came on stream in July 1966, South Africa became for the first time completely independent of imported refined products.

These refineries are relatively small by world standards where new refinery capacities tend to be greater than 350 000 barrels per day. The location and capacities of the South African refineries are shown in Graph 2 below.



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South African Refineries, their Capacities and Locations

Refinery Locations in South Africa Zimbabwe Walvis Bay

Botswana

Windhoek

Pande & Temane Gas Fields

Mozambique

Gaborone

Namibia Johannesburg

Witbank

NATREF 108 kbpd (Sasol & Total)

Sasol 2&3 eq 150 kbpd

Sasolburg Kudu Gas Field

South Af ri ca

Maputo

Swaziland

Richards Bay

Lesotho

Engen 120 kbpd

Durban SBM

Saldahna Bay Caltex 100 kpbd

Mossgas equiv. 45 kbpd

Cape Town

East London

Mossel Bay

Port Elizabeth

Mossgas Field

SAPREF 180 kbpd (Shell & BP)

Crude Oil Refinery Synfu el Plant Pipelines Major markets 0

500 km

[Source: BPSA]

3.3

Lubricant Blending Plants

As mentioned, the total market for automotive and industrial lubricants in South Africa is around 400 million litres. Gauteng is the biggest market for lubricants with a market share of around 60%. The Western Cape and KwaZulu Natal come in at around 15% each with the other provinces making up the remaining 10%. Lubricants, because of the personal service of technical people, have higher margins than fuels.

The major lubricant blending plants in South Africa are: ♦

LOBP (BP Island View, Durban) supplier to Castrol, BP and Shell;

♦

Engen/Caltex joint venture at Island View, Durban; and

♦

Sasol/Total joint venture also at Island View, Durban.

There are also minor lubricant oil blending plants such as: ♦

Fuchs Lubricants Johannesburg;

♦

Blendrite, Durban;

♦

Indy Oils, Cape Town; and

♦

H&R Blenders, Durban.



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Independent blend plants include: ♦

Lubritine, Durban;

♦

Motorlube, Durban;

♦

Piston Products, Cape Town;

♦

Petromark, Johannesburg;

♦

Spanjaard, Johannesburg;

♦

Germ Lubricants, Johannesburg; and

♦

KZN Oils Durban.

Summary of Players

Production Company

Employees

Revenue

Capacity (Barrels /day)

Blue Chip Lubricants

Oil company

Refinery Lubricants

30

X

(Pty) Ltd Chevron South Africa

1 200

100 000

(Pty) Ltd Deojay Petroleum KZN

X

X

10

X

(Pty) Ltd Engen Petroleum Ltd Fuchs Lubricants (South

3 379

135 000

X

X

117

27

H and R South Africa

36

X X

Africa) (Pty) Ltd Germ Africa (Pty) Ltd

X

X X

(Pty) Ltd Indy Oil SA (Pty) Ltd

57

X

KZN Oils (Pty) Ltd

84

X

Lubritene (Pty) Ltd National Petroleum

X 573

108 500

Refiners of South Africa

X

(Pty) Ltd t/a NATREF Petroleum Oil and Gas

1 836

Corporation of South

R10,565.0m (2011)

45 000 X

X

Africa (PetroSA) Petroleum Marketing

42

Organization (Pty) Ltd

X

t/a Petromark Piston Power Chemicals

X

cc Sasol Wax

500

(Div of Sasol Chemical Industries Ltd)


R2.5m (2011)

X


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Production Company

Employees

Revenue

Capacity (Barrels /day)

Shell & B P South African

730

Oil company

Refinery Lubricants

180 000

Petroleum Refineries

X

X

(Pty) Ltd Spanjaard Ltd

107

R102.1m

X

(2011) Total South Africa

800

(Pty) Ltd Valvoline South Africa

X

15

(Pty) Ltd

4

STATE OF THE INDUSTRY

4.1

Local

X

The volumes of major petroleum products produced in the last decade are shown below.

Extent of Production of Petroleum Products during the last Decade RSA Consumption by Major Fuel ML 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 % of Total Petrol 10 396 10 340 10 335 10 667 10 985 11 165 11 279 11 558 11 069 11 311 46.6% Diesel 6 254 6 488 6 831 7 263 7 679 8 115 8 708 9 755 9 762 9 109 37.5% Paraffin 857 786 745 769 797 761 738 696 532 544 2.2% Avtur 2 020 1 924 1 967 2 099 2 076 2 180 2 260 2 402 2 376 2 186 9.0% Fuel Oil 555 555 536 528 569 489 476 465 555 593 2.4% LPG 567 599 586 558 563 550 605 636 613 528 2.2% TOTAL 100.0% 20 649 20 692 21 000 21 884 22 669 23 260 24 066 25 512 24 907 24 271 % Change 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 AA I 00-09 Petrol -4.3% -0.5% 0.0% 3.2% 3.0% 1.6% 1.0% 2.5% -4.2% 2.2% 0.9% Diesel 4.4% 3.7% 5.3% 6.3% 5.7% 5.7% 7.3% 12.0% 0.1% -6.7% 4.3% Paraffin -18.7% -8.3% -5.2% 3.2% 3.6% -4.5% -3.0% -5.7% -23.6% 2.3% -4.9% Avtur 1.3% -4.8% 2.2% 6.7% -1.1% 5.0% 3.7% 6.3% -1.1% -8.0% 0.9% Fuel Oil -1.1% 0.0% -3.4% -1.5% 7.8% -14.1% -2.7% -2.3% 19.4% 6.8% 0.7% LPG 5.0% 5.6% -2.2% -4.8% 0.9% -2.3% 10.0% 5.1% -3.6% -13.9% -0.8% TOTAL -1.7% 0.2% 1.5% 4.2% 3.6% 2.6% 3.5% 6.0% -2.4% -2.6% 1.8% Source: Sapia and DME; AAI is Average Annual Increase

The issue of fuel security is an important one. Recent shortages have been as a result of unplanned shutdowns at some refineries. According to the Fuel Retailers’ Association, the recent shortages in Gauteng were blamed on the ongoing unplanned shutdown at SAPREF in Durban. Shell, joint owner of SAPREF had to ration its customers and implement contingency measures, which included, “Procuring cargoes of refined product for import into South Africa and co-ordinating efforts with other petroleum suppliers to supplement product shortfalls.” At the end of January 2012, SAPREF reported that it had restarted its refining operations, so production was expected to be back at full capacity within a few days.



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According to the South African Petroleum Industry Association (Sapia), Government and the industry were tackling the security of fuel supply. A Sapia executive director was reported as saying, “A petroleum products planning team, which comprises the petroleum industry, the National Energy Regulator of South Africa (NERSA) and the Department of Energy (DOE) and pipeline owners Transnet, is meeting on a regular basis to assess the situation and minimise supply disruptions.”

The new multi-product pipeline (NMPP) used for the first time on 11 January 2012, is expected to help speed up supply to the inland regions. According to the Transnet group CEO Brian Molefe, "We are now able to concurrently run the Durban to Johannesburg pipeline and the NMPP with petroleum products that will see some three million litres per hour ... flowing between Durban and Johannesburg every week." The diesel took a week to travel 555km, passing through three pump stations and over the Drakensberg escarpment, from the Durban port to the Jameson Park inland terminal in Heidelberg, at a speed of 6kph to 7kph. Two more terminals have to be constructed but once complete, probably within the next 18 months, the pipeline will be able to transport 95-octane and 93-unleaded petrol, 500ppm and 50ppm diesel, jet fuel and gas. The entire project is expected to cost at least R23.4bn.

Sasol has now built an 800km natural gas feeder pipeline from the natural gas fields in Pande and Temane in Mozambique, which it also uses as feedstock. Government subsidies used to be needed, as synthetic production is more expensive than crude oil refining at world crude oil prices of $18 to $20 a barrel. However at current prices of around $100 to $120 a barrel, Sasol’s plants are experiencing large profits.

Despite these recent investments, the petrol and lubricants sector is at a crossroads. Currently the sector faces daunting challenges similar to the electricity sector in that demand is outstripping supply. The six refineries in the country are operating at full capacity. Increasing use of imports has become necessary and the crude oil refineries are aging, most built in the early 1960’s and there is need for extensive investment particularly to meet cleaner fuel specifications. Thus, decisions will need to be made soon as to the future of the sector.



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South African Refineries and Their Capacities South African Refining Capacity (bbl/day) 1992 1997 2007 Sapref 120 000 165 000 180 000 Enref 70 000 105 000 125 000 Chevref 100 000 100 000 100 000 Natref 78 000 86 000 108 000 Secunda 150 000 150 000 150 000 PetroSA 45 000 45 000 45 000 Coega/Western Cape Mafutha TOTAL 563 000 651 000 708 000 ML/Annum 32 664 37 769 41 076 Imports/Biofuels ML/Annum TOTAL 563 000 651 000 708 000

2009 2017 Base 180 000 180 000 125 000 125 000 100 000 100 000 92 000 92 000 150 000 150 000 45 000 45 000

692 000 40 148 4 000 760 945

692 000 40 148 10 000 864 363

Refinery Expa nsion Scenarios 2017a 2017b 2017c 360 000 180 000 180 000 125 000 100 000 92 000 92 000 92 000 150 000 150 000 150 000 45 000 45 000 45 000 400 000 310 000 80 000 872 000 867 000 857 000 50 591 50 301 49 721 500 500 500 880 618 875 618 865 618

2017d 360 000

92 000 150 000 250 000 852 000 49 430 1 000 869 236

[Source: SAPIA]

There are five possible configurations for the future. 1. A grassroots refinery would be built with a capacity of around 350 000 barrels per day in order to achieve the economies of scale required of international markets. Hence the proposed refinery at Coega is mooted at 400 000 barrels per day. 2. The Base case in the table above shows that to achieve the estimated demand of 865 000 barrels a day, with no additional refining capacity, South Africa would require 10 000 megalitres of main fuels (petrol, diesel and kerosene) to be imported into the country by 2017. This appears to be the preferred case of the owners of the crude oil refineries in the country as significant export refining capacity is coming on stream in the Arabian Gulf and India which could supply the country’s needs at the minimal cost of increasing import facilities. 3. Expansion scenario 2017a in the table envisages no new build at Coega but a substantial brownfields expansion at SAPREF and investment at the aging refineries of Chevref and Enref to meet new clean fuels specifications and environmental upgrades which are expected to be very costly. These two plants were built 50 and 60 years ago and are now located within urban areas and need significant investment. 4. Scenarios 2017b and 2017c see the closing of both Chevref and Enref and the building of either the full envisaged Coega at 400 000 barrels per day or a smaller Coega, but still with sufficient scale and the mooted coal to liquids plant in Limpopo. However Mafutha in Limpopo will need government support and due to its process of coal gasification, is environmentally problematic. Both these scenarios are accompanied with a measure of imports. 5. Finally 2017d envisages a smaller Coega, at less cost but with less economies of scale, and a significant brownfields investment at SAPREF. The marginal refineries at Enref and Chevref are also to be closed as in scenarios 2017b and 2017c. More imports are envisaged here as well. 2017d is likely to be the most capital cost effective. However the operational costs of moving refined petroleum product from Coega to the main markets still needs to be factored in.



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The regulations covering the Liquid Fuels Industry in South Africa are being overhauled. The current ‘MPAR’-based regulation comprising the MPAR, Service Differential and Dealer Margin is being replaced with mechanisms based on the Capital Asset Pricing Model (CAPM) and the Weighted Average Cost of Capital (WACC) applied to a rate base calculated by using activity based regulatory accounts and similarly based costs. This is explained in greater detail under Regulations.

The market for lubricants in South Africa is diverse and for this reason it is difficult to establish industry growth or decline. However vehicle sales have recovered strongly in the past couple of years although drainage periods are more drawn out. Car sales are leading indicators of upswings in the economic cycle and GDP in South Africa is expected to grow out of the recession of 2009 and hover around the 3.5% to 4% level for the medium term.

Forecast South African Economic Performance

Real GDP and it's spending composition (%Change)

Forecast GDP

2010 2.8

2011 3.5

2012 3.7

2013 3.9

2014 4

Private Consumption

4.6

4.8

4.5

4.2

4.5

Government Consumption

4.6

4

4

4

5

Gross Fixed Investment

‐3.6

2

5

7

10

Export Goods & Services

5.4

7

5

6

5

Import Goods & Services

10.4

11

10

10

10

Change in Stocks

‐0.5

1

1

0.5

0.5

Domestic Demand

4.1

4.5

4.6

4.7

5

Source: First National Bank

The lubricant sector is more labour-intensive than fuels as technical skills are important in ensuring that the appropriate product is applied to the relevant application. Most major lubricant brands have their own laboratories where used oil is analysed to understand the potential and actual problems of an engine.

The retail market in South Africa is close to maturity as there is little room for an increase in the number of service stations. There is, though, dynamism in this market, characterised by the closure of marginal sites (low volume sites) and the opening up of new sites in prime positions. These new sites, as is the global trend, are characterised by larger forecourts and new services that are not necessarily petroleum related, such as convenience stores and car washes.

4.1.1

Regulations

Due to the oil embargo imposed on South Africa in the Apartheid era, oil procurement was largely done by the Governments' Strategic Fuel Fund or SFF. With the disappearance of apartheid and the lifting of sanctions, oil companies now purchase their own crude oil supplies directly from international markets. Each company has its own trading division which secures any crude oil or



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refined product it needs and arranges for this to be fed into their refineries or on shore distribution networks. No regulations govern the procurement of crude oil. The SFF still exists to secure Parastatal needs such as PetroSA, but trading activity is limited.

The current regulatory framework around the oil industry evolved over the past fifty years. An important part of Government’s control of the Oil Industry is control of the margins that can be earned across the value chain. Initially Government controlled the entire oil industry value chain including refining. However as outlined in the diagram below, this regulation now starts at the refinery gate and ends at the retail service station.

Current/Outgoing Government Regulation of the Oil industry

OUTGOING REGULATION Mechanisms

Costs + 25% profit margin Cost recovery; seconry distr

Beneficiaries

DEALER MARGIN 24.5 c/l DEALER MARGIN SERVICE DIFFERENTIAL WHOLESALE MARGIN

15% ROA triggered outside 20% & 10%

Government

GOVERNMENT DUTIES AND TAXES UNDERRE COVERY or OVERRECOVERY

Transnet tariffs; primary distr

ZONE DIFFERENTIAL

No competition between refiners and importers

BFP

Service Station Dealer Oil Companies Oil Companies Government - Oil Industry collects 20% of all indirect taxes Changes as prices move in a month Transnet and Oil Companies Crude Oil & Synthetic Fuel Producers and Refiners

This highly regulated sector is currently undergoing transition from an outdated regulatory margin system based primarily on what is known as the Marketing of Petroleum Activities Return (MPAR) to transparent margin mechanisms based on widely accepted theoretical models such as the Capital Asset Pricing Model (CAPM) and the Weighted Average Cost of Capital (WACC). In the past the target rate of return was set by a black box where nobody was clear of the rate of return’s derivation. However the new system is founded on clearly visible criteria such as Equity Market Risk Premiums, Risk Free Rates as published in the press and company betas derived from share prices.



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New Proposed Oil Industry Regulatory Mechanisms 2011

CURRENT REGULATION VS TASK 141 - November 2011 CURRENT REGULATION

Petrol ULP 95

TASK 141 PROPOSED REGULATION

(DEALER MARGIN – 85.2 c/l)

(Retail Op Margin – 59.7 c/l) (Retail Investor Margin – 55.8 c/l)

Wholesale Margin – 54.1 c/l `

Wholesale Margin – 27.7 c/l

141

Secondary Distribution Margin – 8.4 c/l Service Differential 11.4 c/l

Secondary Storage Margin – 12.6 c/l TRANSPORT COST – PRIMARY 22.9 c/l

Zone Differential 22.9 c/l

GOVERNMENT DUTIES AND TAXES – 274.25 c/l ULP 95 Petrol

GOVERNMENT DUTIES AND TAXES – 274.25 c/l ULP 95 Petrol

UNDERRECOVERY or OVERRECOVERY

UNDERRECOVERY OR OVERRECOVERY

Coastal Storage Margin – 1.4 c/l

BASIC FUEL PRICE – 629.15 c/l

Pump Price = 1077 c/l

BASIC FUEL PRICE – 629.15 c/l

Difference 15c/l

Pump Price = 1092 c/l [Source: DOE]

The process is being implemented, but is not expected to be fully applied until the end of 20 12.

The following explains the current petrol price build up as at No vember 2011.

♦

The Dealer Margin was based on a survey of costs of a sample of 100 service stations

undertaken by the Small Business Advisory Bureau (SBAB) of the North West University, the basis of which is that operating costs should be 80% of gross profit. This methodology was developed from the SBAB’s 1997 report. The guideline related to costs in relation to gross profit was defined as follows: “The SBAB’s guideline is that costs should not absorb more than 80% of the gross profit”. The report proceeds to say that: “The average, according to the investigation, is 95,28%. This is well above the norm, but a substantial improvement to the previous investigation is realised. This is also due to the fact that there was an increase in the gross profit margin” 1

1

Small Business Advisory Bureau (NWU): Retail Margin Investigation, November 1998, Page 15



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The dealer margin comprised 7.9% of the Price Build-Up in November 2011 and is a greater amount than the Industry Margin which stood at 5.0% in the same month.

The new regulation being introduced by government is predicated on what is known as a Benchmark Service Station (BSS). Here a ‘benchmark’ fuel only site has been designed and the operating costs and assets evaluated. The BSS margin contains a reward for building the service station, for running the service station, any entrepreneurial reward and any other costs (repayment of key money) that the dealer or oil company may have incurred or will incur in running the service station. The BSS margin is a lot higher than the ‘old’ dealer margin because the capital outlay in building the service station now rests in the BSS margin and not the wholesale margin. Those dealers that own their own sites will make a handsome margin and oil companies need to negotiate with their franchisees to extract the margin that is due to them. The dealer under the new regulation is in a powerful position.

♦

Industry/Wholesale Margin. The composition and derivation of the Industry Margin via the

MPAR Mechanism where the Oil Industry earns a 15% return on assets and an adjustment is made to the margin should this return fall below 10% or rise above 20%. Suffice to say that the Industry Margin mechanism is being changed.

History of Petrol Wholesale Margin

Petrol Wholesale Margin MPAR return (%) Indicated margin increase (c/l) Increase granted (in succeeding year) Margin at year end (c/l)*

1990 1991 1992 1993 1994 1995 1996 1997

1998 1999 2000 2001 2002 2003 2004 2005** 2006 2007 2008 2009 2010***

(1,6) 4,0 _ 5,6

9,7 2,5 1,0 17,1

3,4 4,0 4,0 9,6

8,7 2,3 4,0 13,6

13,9 0,0 0,5 14,1

12,0 0,0 0,0 14,1

9,2 2,7 0,0 14,1

6,8 4,9 0,0 14,1

8,8 3,6 2,0 16,1

7,3 3,81 0,5 17,6

4,0 6,75 1,23 18,8

3,8 6,93 2,58 21,4

1,9 8,97 6,93 28,3

9,72 3,21 8.97 37,3

21,22 (4,21) 2,0 39,3

_ _ _ 39,3

_ _ _ 39,3

_ _ _ 39.3

_ _ 5.4 6.2 3.0 44.7 50.87 53.869

*Petrol 93 Octane **The Marketing of Petroleum Activities Return (MPAR) system was no longer in use from 2005. A new sys tem is being developed. ***The Minister of Minerals and Energy approved a wholesale margin increase of 3.0 c/l from 1 December 2010

[Source: SAPIA Annual Report]

♦

The service differential is an actual average of depot storage and distribution costs from the

depots to service stations and bulk commercial customers, and is determined by the DOE on audited figures supplied by the petroleum industry and averaged for the whole country. Thus, this element of the regulated pricing regime compensates the oil marketing companies for the actual cost of operating the depot and the costs for distributing the product to the service stations and other commercial customers. It is calculated by using total fuels volumes uplifted and delivered from oil company depots for regulated products, namely petrol, diesel, and illuminating paraffin. Furthermore, it is calculated on actual historic cost for the previous year for the whole Industry, averaged country-wide.

The capital costs in respect of storage and handling at depots are compensated through the MPAR formula or the wholesale margin. Therefore exactly the same amount in SA cents per



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litre is included in the wholesale price, independent of the actual distance between the depots and the customer. The service differential was increased in 2010 to 11.4 cents per litre and as at November 2011 comprised 1.1% of the Price Build-Up. This element has been reviewed under Task 141 and the capital costs and operating costs have been consolidated into the new margins. No longer is the capital cost sourced from the wholesale margin. Furthermore the Service Differential has been split into its two components of Secondary Storage and Handling and Secondary Distribution with a margin in cents per litre for each. The combined margin for these two mechanisms is currently 21 c/l compared to the Service Differential at 11.4 c/l as mentioned above. The objective of government in this new process is to encourage investment in these avenues as stand alone, transparent activities rather than dominated by the integrated oil companies.

♦

Government Duties and Levies are set by the authorities.

Government Duties & Levies – 95 Octane Unleaded in November 2011

2011 RSA c/litre Nov

Customs Fuel tax & excise 177.5

4

64.7%

1.5%

Equalisation fund levy -

Road Pipeline accident Levy fund 0.15

80

0.1%

29.2%

Slate levy -

DSML

Transport Recovery Pump Levy Ro und ing

T OT AL

10

3

-0.4

274.25

3.6%

1.1%

‐0.1%

100.0%

[Source: DOE]

♦

The Zone Differential is the cost of moving petroleum products to Inland Areas away from

the Coast. It is based on rail tariffs and increases progressively as the petroleum product moves inland. The cost of 22.9 c/l shown in South African Price Build-Up November 2011 above reflects the cost of movement of refined product from the Durban coast to Gauteng.

♦

Over and Under-recovery reflects the difference between the cost of purchasing refined

petroleum product and the price paid for that petroleum product by the motorist. As the cost of petroleum product changes daily, while the price to the motorist or consumer only changes monthly there is a mismatch between procurement and sales. This difference is especially great when petroleum product prices are rising or falling quickly as was seen in 2008 when prices spiked prior to the global economic meltdown caused by the credit crunch. No value has been attached to this element in the diagram as it could be a negative or positive, or it could be inconsequential.

♦

Basic Fuel Price (BFP) . The two biggest components of the price build-up are Government

taxes at 25.5% of the pump price and the Basic Fuel Price or BFP, which stood at 58.4% of the pump price in November 2010. The bulk of South African products are refined locally. Where there are shortages, products are imported. The crude oil refineries' profitability derives from the difference between the cost of crude oil and the cost of refining versus the BFP.



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BFP is the price at which the refiners hand over their product to the Marketers. This is the price that an importer of refined product into South Africa would pay for fuel. It includes freight, insurance, ocean loss, landing, wharfage, coastal storage, the financing of that coastal storage and demurrage from refining centres in the Mediterranean, Arab Gulf and Singapore as shown in the diagram below. The IP and diesel prices are weighted 50% of the spot prices originating from the Mediterranean and 50% of those prices from the Arabian Gulf, while the petrol price is derived from 50% Mediterranean and 50% Singapore. The aim is to obtain the most competitive prices from the most competitive refining centres.

The other components of BFP are based principally on international prices formulated in international markets. At current high prices of crude oil BFP makes the synthetic fuel industry more viable.

Components of the Basic Fuel Price

Basic Fuel Price Med

Platts Product Prices (Spot) •Med & Arabian Gulf for Diesel & IP •Singapore and Med for Petrol

AG

Singapore

BFP South Africa

Shipping Costs Freight Insurance Landing Wharfage Finance Storage Demurrage   

FOB Values USc/Ag 100% Spot

   

[Source: BPSA]

Illuminating Paraffin and diesel have a maximum government controlled price at the wholesale price level in the case of the commercial marketers, (that is, there is no additional service station dealer margin). While no discounting of service station petrol pump prices is allowed, the different oil company commercial marketers are allowed to compete for customers by discounting the price of their products.



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4.1.2

BEE

Recent developments include the licensing of all players to promote Black Economic Empowerment, investment and create employment opportunities and small business BEE - The South African crude oil industry is dominated by foreign owned multinationals which have all been proactive in seeking local Black Economic Empowerment partners to comply with the Oil Industry Charter. The Oil Industry Charter was one of the first BEE initiatives and it is not seen as progressive. As a result, the Government has challenged the Oil Industry to come up with better plans on BEE.

4.2

Regional

The Liquid Fuels Industry is regional with most companies represented within the South African Customs Union (SACU) and the bigger players also having a presence in the Southern African Development Community (SADC). The biggest oil companies in the world are represented in South Africa, with the exception of Exxon/Mobil, which exited South Africa in the late 1980s with the strengthening of sanctions against Apartheid. However, they have started to build a presence in the lubricant market. Recently BP and Shell sold several of their Africa operations North of the Limpopo to concentrate on their global exploration and production divisions.

As mentioned earlier, the estimated size of the South African lubricants market is 400 million litres. The other countries in the Region are a lot smaller than this.

Estimated size of Lubricants Market of selected African Countries

Lub rica nts

Bo tswa na

Ma la wi

T a nza nia

Za mb ia

ML

ML

ML

ML

2008

47

3

12

14

2009

40

5

9

16

18%

21%

22%

20%

82%

79%

78%

80%

Retail Commercial

The table below shows that Botswana is a relatively rich country with a per capita income of around $6500. This higher level of development is evidenced by its relatively high consumption of lubricants and is a function of its diamond mine output and relatively higher vehicle levels. The global economic collapse in 2009 affected diamond production and hence lubricant sales declined in 2009.

Zambia has a sizable copper mining industry and this country’s lubricant consumption is also relatively high. Copper prices did not fall much in the global credit crunch of 2009 and hence lubricant volumes remained at high levels in 2009.



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Malawi and Tanzania are relatively undeveloped countries although there is potential for growth in both countries.

The market share of the marketers of lubricants in selected African countries is shown in the table below. The information is relatively dated, but it takes time to build market share in a country so that the major market players are unlikely to have changed.

Estimated Market Share of Selected African Countries

Estimated 2000 Market Share

South & East Africa Lubricants

BP CALT E X CFP EN GEN S HELL CA ST R OL 27.4% 14.8% 6.4% 20.4% 30.6% 0.4%

Botswana Est Market Share

BP Ma la wi Es t Ma rk e t Sha re

Mo b il

55.4% BP

Mo za mb iq ue Es t Ma rk e t Sha re

57.9% 17.5% BP

T a nza nia Est Ma rk e t S ha re

BP

7.5% Mo b il

8.1% T o ta l

Mo ç a c o r Othe rs

10.2%

12.8%

7.9%

0.7%

10.5%

CALT EX

EN GEN

OT H ER

T OT AL

22.7%

13.5%

8.7%

6.4%

31.2%

Ga p co

40.8% Ca lte x

70.8%

T o ta l Int.

S HE LL A gi p

27.2%

Za mb ia Es t Ma rk e t Sha re

29.0% P ' Mo c

BP N a mib ia Es t Ma rke t Sha re

Ca lte x

11.0%

Ga p oi l

1.1% Ag ip

T ota l

4.7%

20.5%

T o ta l

4.0%

N ato il

Mo b il

5.0%

El f Oi l

0.4% J o ve nna

9.1%

0.2%

M ob il

4.4% Od y ' s 0.0%

0.8% Eng e n 0.0%

The following table shows the relative socio-economic performance of South Africa and its fellow member countries in the Southern African Development Community.

SADC relative Socio-Economic Performance SADC St at is ti cs

SEYCHELLES BOTSWANA MAURITIUS RSA NAMIBIA ANGOLA SWAZILAND LESOTHO ZAMBIA TANZANIA MADAGASCAR MOZAMBIQUE MALAWI CONGO, DEM REP ZIMBABWE AVERAGE SADC TOTAL SADC EURO AREA

GNI PER CAPITA

GDP

GDP GROWTH

POPULATION

INFLATION (GDP DEFLATOR)

LIFE EXPECTANCY AT BIRTH

LAND AREA

2008 US$

2008 US$billion

2008% on 2007

2008 millions

2008%

2007 years

km2 000's

$ 10 290 $ 6 470 $ 6 400 $ 5 820 $ 4 200 $ 3 450 $ 2 520 $ 1 080 $ 950 $ 440 $ 410 $ 370 $ 290 $ 150

$ 0.8 $ 13.0 $ 8.7 $ 276.8 $ 8.6 $ 83.4 $ 2.6 $ 1.6 $ 14.3 $ 20.5 $ 9.0 $ 9.7 $ 4.3 $ 11.6

3.0% -1.0% 5.0% 3.0% 3.0% 15.0% 2.0% 4.0% 6.0% 7.0% 7.0% 6.0% 10.0% 6.0%

$ 33 $ 451.1 $ 38 821 $ 13 565.5

5%

$ 3 060

1.0%

0.1 1.9 1.3 48.7 2.1 18.0 1.2 2.0 12.6 42.5 19.1 21.8 14.3 64.2 12.5 17.5 260.3 325.9

25.0% 17.0% 8.0% 11.0% 12.0% 20.0% 3.0% 10.0% 11.0% 9.0% 10.0% 7.0% 9.0% 19.0% 12%

73 51 72 50 53 47 46 43 45 55 60 42 48 46 44 52

3.0%

80

Source: W orld Bank, World Development Indicators 2008


0.5 581.7 2.0 1 219.1 824.3 1 246.7 17.3 30.4 752.6 945.1 587.0 801.6 118.5 2 344.9 390.8 657.5 9 280.3 2 585.2


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The demand growth and drivers in the next five years in the Southern African Region will hinge on progress of the demand for the output for the products in the Retail and Commercial sectors which consume lubricants. Vehicle sales in most countries particularly north of the Limpopo come off a very low base and there is huge potential for a structural shift upwards as these economies continue to grow as they have in the past couple of years. Similarly industry is underdeveloped and if the countries are able to break out of the poverty cycle there is much potential. The barriers to entry comprise the poor infrastructure and underdeveloped markets, as well as the lack of scale. It is important for a lubricants marketer to have a firm foothold in South Africa from which to base any move into Africa north of the Limpopo.

4.3

International

The likelihood is that crude oil prices will remain high with the emerging economy giants of China and India having 40% of the world’s population and growing at around 7% to 10% per annum. Both require imported crude oil as they have little reserves of their own and political uncertainty in oil-producing countries continues to cause uncertainty and rising costs. This means that liquid fuel import costs will continue to displace other factors of production and reap economic rent for countries with reserves of crude oil and impoverish countries that need to import this commodity.

5 ♦

SWOT ANALYSIS Strengths o

The liquid fuels sector is world class and is operated by most of the world’s largest multinational corporations.

o

The logistics of this sector adequately provides fuel and lubricants across the wide expanse of South Africa and its closest neighbouring countries.

o

This sector provides fuel and lubricants which meet international specifications in terms of quality and safety.

♦

Weaknesses o

The newest crude oil refinery was built 40 years ago and the oldest 60 years ago.

o

Little investment in logistics and infrastructure has taken place in the past 20 years.

o

A refinery is capital intensive and carries high fixed costs and it must therefore be run at high capacity to cover these costs.

o

All refineries are operating at full capacity and more and more imports are necessary.

♦

Opportunities o

The regulatory regime has been revised to a more transparent and fair system to encourage investment by all parties not merely oil multinationals.

o

Investment in refining and/or import facilities.



Page 22 of 66

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o

Oil multinationals are divesting of pieces of their businesses allowing local/BEE companies to enter the oil arena.

♦

Threats o

Crude oil and petroleum product prices have remained high and threaten to lower oil intensity in production and lead to more oil efficiency.

o

Biofuels are likely to increase in usage in the next 20 to 30 years.

o

Oil reserves will peak and then fall and production will begin to decline as big consumers such as China and India take the place of previous large markets such as the USA and Europe.

6

FUTURE OUTLOOK

The new regulatory structure discussed above should encourage more players to enter the liquid fuels industry which will assist in meeting the goals of providing refined petroleum products at the cheapest possible cost to the consumer with a fair return to the Petroleum Industry.

South Africa needs significant investment in the Liquid Fuels Sector. All refineries are operating at capacity and significant refined petroleum product is being imported. The problem of supply inland has recently been solved with the introduction of the NMPP from Durban to Gauteng. However, not before extensive, expensive road bridging had to take place. A new refinery is needed and PetroSA seeks to build a 400,000 barrel a day crude refinery at Coega, to be ready in 2017. It is expected to cost $11 billion and is currently at the pre-feasibility stage. However this will not be before some 8 to 10 billion litres or o r 25% of demand is being imported annually.

The challenges of burgeoning demand requiring urgent investment particularly in logistics to cope with higher imports and competitive reward for this investment via the regulatory system, while still maintaining the lowest possible price to the consumer, make this strategic sector vulnerable to underperformance in the short to medium term. In the medium to longer term decisions must be made about domestic refinery capacity and the relative cost of building a new refinery versus importing refined petroleum product on a large scale and the security of supply issues that comes with this. South Africa is a developing country and questions concerning whether or not can it afford to spend $11bn building a new refinery which would have to export refined petroleum product at a loss at times have been raised.



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7 ♦

ASSOCIATIONS AND REFERENCES South African Petroleum Industry Association (SAPIA) Mr Avhapfani Tshifularo Tel: +27 11 783 7664 Website: http://www.sapia.co.za

♦

Fuel Retailers’ Association Mr Reggie Sibiya Tel: +27 11 886 2664 Email: [email protected]

♦

National Electricity Regulator Mr Nhlanhla Cebekhulu Tel: +27 12 401 4768

♦

Department of Energy Mr Ntuthuzelo Fikela Tel: +27 12 317 8647 Website: http://www.energy.gov.za

♦

http://www.fischertropsch.org/primary_documents/presentations/acs2001_chicago/chic_slide01.htm

♦

Sasol 2011 Annual Report



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APPENDIX 1 Typical Refinery Operation

what is a refinery? Energy

Products +$ LPG Petrol Naphtha

Crude Oil

Increasing Boiling Pt & Molecular wt

Kerosene Diesel/Gas Oil

Other Feeds

Fuel Gas and Oil

Lubes Waxes Bitumen Heavy Fuel Oil/ MFO Losses Fixed Costs -$ [Source: BPSA]

The Sasol synfuel plants at Secunda in Mpumalanga operate the world’s only commercial coalbased synfuels manufacturing facilities. These produce synthesis gas through coal gasification and natural gas reforming using the Fischer-Tropsch conversion technology. Syngas is a mixture of carbon monoxide and hydrogen. Using a catalyst, the Fischer-Tropsch reaction coverts syngas into feedstock to produce liquid fuels. PetroSA converts natural gas into liquid fuels. These two processes produce far more high octane and thus more valuable products and little fuel oil. The diagrams below outline the two synthetic processes.



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Coal to Liquid Fuels Synthetic Refining Process

Coal to Li quids Refi ning Gas feedsto ck for Petrochemic als

Oxygen

LPG

Coal

Coal Gasification

Gas

Gas Clean-up

Clean Gas

HTFT Synthol Process

Syn Crude

Conventional Refining:

Petrol

Cat Reformin g Cat Poly Hydrogenation

Jet / Paraffin Diesel Fuel Oil

Steam

Alco ho ls [Source: IPSR]

Natural Gas to Liquid Fuels Synthetic Refining Process

Gas to Liquids Refini ng Gas feedstock for Petrochemicals

Oxygen

LPG

Natural Gas

Gas Reforming

Clean Gas

HTFT Synthol Process

Steam

Syn Crude

Conventional Refining: Cat Reformin g COD Alkylation Isomerisation Hydrogenation

Petrol Jet / Paraffin Diesel Fuel Oil Alco ho ls [Source: IPSR]



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G D T N I L T ) E Y 2 K T 4 : R P A ( s N e M O I e y M o U T l p E A Z L I m E O N R A T G E R P O

S T N A C I R 2 B 1 U 0 L 2 y D r N a u r A b L e O F R – T E 2 P 3 F 3 O E E D R O U C T I C C S A F U N A M

D T L ) 7 Y 2 T : P ( A s e C I e y o R l F p A m E M R E G

s g n i d d t l o L H ) y y t P a ( j o e D

% 0 0 1

D T L ) Y T P ( N 0 Z 1 K : M s U e E e y L l o O p R m T E E P Y A J O E D

C C S L A C I M E H C R E W O P N O T S I P

d e d s a n l u l o e p w m s o a c s l s i e o t . u g s b i n e i r t t a s s c a i d i r e r d b u g n l a d s e e r d u n t e c l a b f u d n n a a M s t d n n a c a i r g b u n l i d l a n i r e t l b s u , d n n o i i t d a e t r s o i p l a i m c i e e p h s t f n o i d n o e t v i l u o b v i r n t I i s d

f o n o i t . u s b t i r n t s a c i r d i d b u n l a d e g d n i t n e a r k r b a l y l m a e n h i o t t n a i n r e e z t i l n i a i c e p S

h t i w l a s i r t n t a s u c i r d n b i u d l f n . a o l r a s n e r i o r u t u l t t a c u i c a i c l f p u r p n g a a a , m e v t t n i e o d m n t e o p u e a d n i

) A C I R F A H T 7 U 1 O D 1 S ( T : s S L e T ) Y N T e y o A P l C I ( p m R E B U L S H C U F

a % m 6 a 2 h p a h P

y d d e R R r M % 4 7

t s u r T r a g h t a K

h g t u s o u r r o T b r l y a i c S m a e F h T

% 0 0 1

% 0 0 1


D T L 4 ) 8 Y : T s P ( e e S y o L I l O p m N E Z K

D T L ) Y T P ( S 0 T 3 N : A s C e I e R y o B l U p L m P I E H C E U L B

D T L ) 7 Y 5 T : P s ( e A e S y o l L I p O m Y E D N I

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e d h g e t r i s f i o n l i a s n i m c t e c u d p d s o n f r a o p e n r l i o a r t c a . u i s t b m m i , e r e e t k s h i v r i a d c t o m d d e m n i l o a l r a t e d u a r , u n t a l a c s i r a t f n t u a s u n i d a c r n M b i u l

y . s t i i h l i s t b n o g l a i n i s i s l i t i p p m o m e o c c r c a o n t i o s r o n n r e s r k e e f a t o o n d t e y n e n e b a v s p e a m e h h c o t e n r e i a h e c t , r y u r m t e a a v r n e g y t n s o n a l i f h a g o r W o

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d t L ) y t P ( m o h W s n w O o h W t h g i r y p o C ©


Page 28 of 66

Siccode 332 & 63500

COMPANY PROFILES BLUE CHIP LUBRICANTS (PTY) LTD

Reg. Number: 1983/001294/07 VAT Number: 4690105061 BEE Rating: Level 4 BBBEE Rating Agency

Updated: 2012-02-03

Postal Address:

Physical Address:

P O Box 940, North Riding

Units 10, 11 & 12, First Floor, Executive City

2162

Industrial Road, Kya Sand, 2169

Tel:

+27 11 462 1829

Fax.:

+27 11 704 1367

Email:

[email protected]

Website:

www.bcl.co.za

Shareholders Shareholder

Percentage

Kathgar Trust

100.00

Management Name

Position

Ms Chrissie Froneman

Franchise & Marketing Manager

Ms Kathleen Marais

Executive Director

Mr Gary Victor Marais

Managing Director

Email

Appointed

[email protected]

History of Business

Blue Chip Lubricants (Pty) Ltd was registered in February 1983 as Stryde Lubricants (Pty) Ltd. The company underwent a name change on 29 September 1989 to Blue Chip Lubricants (Pty) Ltd. Nature of Business

Blue Chip Lubricants (Pty) Ltd is a manufacturer of industrial and specialised oil lubricants, which are supplied to the mining, automotive and other industries. Nr. of Employees

30

Banks

Standard Bank of South Africa Ltd

Auditors

Alchemy Financial Services

Brandnames

Blue Chip Lubricants



Page 29 of 66

Siccode 332 & 63500

CHEVRON SOUTH AFRICA (PTY) LTD

Trading As: Caltex Reg. Number: 1911/001154/07 VAT Number: 4460101563

Updated: 2012-02-09

Postal Address:

Physical Address:

PO Box 714, Cape Town

Chevron House, 19 DF Malan Street

8000

Foreshore, Cape Town, 8001

Tel:

+27 21 403 7911

Fax.:

+27 21 403 0550

Email:

[email protected]

Website:

www.chevron.com


Percentage

Chevron Corporation USA via Chevron Global Energy Inc

75.00

BEE Consortium

23.00

Employee Trust

2.00

Management Name

Position

Mr B Forbes

Director

Ms Yoliswa Pumla Balfour

Non-Executive Director

Ms Teresa Booth-Oliveira

Commercial Manager

Ms Colleen Carr

Human Resources Manager

Mr Martin Nigel Andrew Donohue

Chief Executive Officer

Email

Appointed

2003-03-10

2010-05-01

Mr Kevin John Mulder

Executive Director

Mr SPA Parker

Director

2010-09-10

Mr Shashi Rabbipal

Alternate Director

2008-11-01

Mr Mashudu Elias Ramano


2003-03-10

Mr Mpho Innocent Scott


2003-03-10

Mr James Kiki Seutloadi

Executive Chairman

Mr Trevor John Stallbom

Executive Director

Mr Arthur Peter Wilson

Financial Director


2010-07-01


Page 30 of 66

Siccode 332 & 63500

History of Business

Chevron South Africa (Pty) Ltd was established in May 19 11 as The Texas Company (South Africa) Ltd. On 27 December 1940, the name was changed to Caltex (Africa) Ltd. A further name change occurred on 4 November 1964 to Caltex Oil (SA) Ltd. However, on 15 June 1975, the company converted to a private company and on 1 October 2005 Caltex Oil (SA) (Pty) Ltd underwent a name change to Chevron South Africa (Pty) Ltd t/a Caltex. Nature of Business

Chevron South Africa (Pty) Ltd t/a Caltex is involved in the refining and distribution of petroleum products such as petrol, diesel, power paraffin, oils, and grease which are sold under the brand name Caltex, to filling stations, retail outlets and co-operatives. The company h as 50 to 60 depots, 800 retail outlets, 21 terminals and a fleet of 90 tanker trucks situated countrywide. It also operates laboratories at the refinery and other plants. The refinery produces approximately 100 000 barrels of crude oil per day of which 95% becomes petroleum. Nr. of Employees

1 200

Empowerment

25% (Black Empowerment Consortium - 23%; Employees Share Trust -

Stake

2%)

Secretary

Mr Nazeem Hendricks

Banks

First National Bank (a division of FirstRand Bank Ltd)

Auditors

PricewaterhouseCoopers

Corporate Governance in Relation to AIDS Policy

Chevron South Africa (Pty) Ltd t/a Caltex has an HIV/AIDS awareness programme that supports and educates employees and their families. The company offers voluntary HIV/AIDS testing and encourages staff that test negative to stay that way. Those who test positive are educated how to stay healthy and productive for longer. Production Capacity

100 000 barrels of fuel per day Brandnames

Caltex, Chevron, Techron, Texaco Trademarks

Caltex, Chevron, Techron, Texaco Distribution Rights

Caltex, Chevron, Techron, Texaco Subsidiaries, Associates & Investments Name

Coal Resources (Pty) Ltd


Percentage

100.00


Page 31 of 66

Siccode 332 & 63500

DEOJAY PETROLEUM KZN (PTY) LTD

Reg. Number: 2004/007140/07 VAT Number: 4950143992 BEE Rating: Level 2 Emex

Updated: 2012-02-06

Postal Address:

Physical Address:

PO Box 201654, Durban North

Unit 3A, Rinaldo Industrial Park

4016

50 Moreland Drive, Durban North, 4051

Tel: Email:

+27 31 569 1276 [email protected]

Fax.:

+27 31 569 1277

Website:

www.deojay-petroleum.co.za


Percentage

Deojay Holdings (Pty) Ltd

100.00

Management Name

Mr Jacobus (Jackie) Frederick le Roux

Position

Email

Managing Director

[email protected] 2004-03-16

Ms Nisha Reddy

Financial Manager

Mr Colin Wright

Technical & Sales Manager

Appointed

History of Business

Deojay Consultants cc was established in July 1994. In March 2004, the company converted to a private company and underwent a name change to Deojay Petroleum KZN (Pty) Ltd. Nature of Business

Deojay Petroleum KZN (Pty) Ltd specialises in the marketing and distribution of internationally branded lubricants including its own Deojay Brand range of Automotive and Industrial Lubricants. Nr. of Employees

10 Permanent

Banks


Auditors

Grant Thornton

Brandnames

Deojay



Page 32 of 66

Siccode 332 & 63500

ENGEN PETROLEUM LTD

Reg. Number: 1989/003754/06 VAT Number: 4820101451 BEE Rating: Level 3 AQRate

Updated: 2012-02-09

Postal Address:

Physical Address:

PO Box 35, Cape Town

Engen Court, Thibault Square, Cnr Riebeeck &

7525

Long Streets, Cape Town, 8001

Tel:

+27 21 403 4911

Fax.:

+27 21 403 4067

Email:

[email protected]

Website:

www.engen.co.za

Branches Branch

Area

Head

Engen Petroleum - Bloemfontein

Free State

Engen Petroleum - Durban Oil Refinery

KwaZulu-Natal

Engen Petroleum - Durban Regional Office

KwaZulu-Natal

Engen Petroleum - Johannesburg

Gauteng

Engen Petroleum - Port Elizabeth District Office

Eastern Cape

Tel

Divisions Division

Area

Head

Tel

Communications Corporate Affairs Corporate Planning Enterprise Risk & Assurance Financial Service HSEQ Human Capital International Business Development Lubricants Refinery Sales & Marketing Supply, Trading & Optimisation Shareholders Shareholder

Engen Ltd (Held by Petronas International Corporation Ltd - 80%; Pembani)


Percentage

Undisclosed


Page 33 of 66

Siccode 332 & 63500

Management Name

Position

Mr Mogamat Adnan

General Manager: Enterprise Risk &

Adams

Assurance

Mr Kamal Bahrin Bin Ahmad Mr Andrew Muir Bryce Mr Lungile Adonijah Dumse

General Manager: Financial Services

2006-12-01

General Manager: Human Capital

2004-12-01

Hartmann

Business Development

Ms Tania Landsberg

Group Communications Manager

Ms Bulelwa Payi Dr Thangaratnam (Bea) Ponnudurai Ms Ivershini Reddy

Mr Nizam Salleh

Ms Vuyelwa Sono Mr Stephen (Steve) Paul Williams

2007-12-01

2011-01-14

General Manager: International

Martin Maphanga

Appointed

General Manager: Refinery

Mr Wayne Patrick

Mr Nkosinathi (Natie)

Email

2001-09-09 tania.lansberg@ engenoil.com

General Manager: Corporate Affairs

2008-04-01

Executive: Communications General Manager: HSEQ

2008-04-01

General Manager: Supply, Trading &

2007-10-01

Optimisation Chief Executive Officer & Managing Director Executive: BEE & Government

vuyelwa.sono@

Relations

engenoil.com

General Manager: Lubricants

Mr David (Dave) William

General Manager: Corporate

Wright

Planning

Mr Vukile Vezithemba

General Manager: Engen Sales &

Zondani

Marketing

2009-01-01

2006-03-24

2006-12-01

History of Business

The company was established in 1989 as Unicorn Petroleum Ltd and underwent a name change to Genref Ltd at a later stage. In January 19 90, the name was changed to Engen Petroleum Ltd. In 1993, Trek Petroleum, Sonap and Mobil were consolidated into the company. In February 2 007, the assets and operations of Zenex Oil (Pty) Ltd were acquired and incorporated.



Page 34 of 66

Siccode 332 & 63500

Nature of Business

Engen Petroleum Ltd produces through the process of refining crude oil, primary refined petroleum products which include LPG, chemicals, oils, fuels, petrols, diesels, paraffins, furnace oils, liquid petroleum gas, lubricants, specialised lubricants, greases, greases with synthetic additives, coolants and brake fluids. Products are sold locally through the Engen Sales & Marketing Division in South Africa and internationally through its International Business Division which has a wider footprint in sub-Saharan Africa.

Engen processes approximately 135 000 barrels of fuel per day and has 1 400 service station dealers. Nr. of Employees

3 379 (Group) 617 - Refinery

Secretary

Ms Fiona Gumede

Banks


Auditors

Ernst & Young


Engen has an HIV/AIDS policy that: ♦

Provides programmes and activities aimed at HIV/AIDS prevention.

♦

Provides support services ensuring affordable and accessible HIV-related healthcare to all employees.

♦

Comprehensively manages and supports those infected.

♦

Protects the rights of employees with HIV/AIDS, including access to work and privacy o f information.

Production Capacity

135 000 barrels of fuel per day. Brandnames

1 Plus, 1 Stop, Dieselube, Dynamic, Engen, Engen Diesel Club (EDC), Engen Xtreme, Gearlube, Quickshop, Truckstop, Xtreme



Page 35 of 66

Siccode 332 & 63500

FUCHS LUBRICANTS (SOUTH AFRICA) (PTY) LTD

Reg. Number: 1979/003105/07 VAT Number: 4010101253 BEE Rating: Level 8 BEE Rating Solutions

Updated: 0000-00-00

Postal Address:

Physical Address:

07 Diesel Road, Isando

PO Box, Isando

Gauteng,1609

Kempton Park, Johannesburg, 1600

Tel:

+27 11 565 9600

Email:

Fax.:

+27 11 392 5686

Website:

www.fuchsoil.co.za

Branches Branch

Area

Head

Tel

Fuchs Bulawayo

Zimbabwe

+26 39 62434

Fuchs Durban

Durban

+27 31 2040700

Fuchs Lusaka

Zambia

+26 12 38411

Fuchs Port Elizabeth

Port Elizabeth

+27 41 5411586

Fuchs Welkom

Welkom

+27 57 3964221

Fuchs Zimbabwe

Zimbabwe

+26 34 751304

Management Name

Position

Mr Stefan Fuchs

Chairman

Email

Appointed

Dr Lutz Lideman Dr Georg Lingg Dr Ralph Rheinboldt Dr Alexander Selent

Deputy Chairman

History of Business

Maxei Oil Refineries (Pty) Ltd was established in June 1979 and was subsequently sold to Mr Frank Kleinman, who changed the name to National Oil (Pty) Ltd. During 1992 the company's name was again changed to Fuchs Lubricants (South Africa) (Pty) Ltd, when the German based multinational company Fuchs PetroLub AG (which is listed on both the Frankfurt and Swiss stock exchanges) acquired 100% of the shares in National Oil (Pty) Ltd. At the same time the local operations of the multinational company Century Oils (Pty) Ltd were m erged into the local Fuchs operations. At this time the Noxal Company (Pty) Ltd, a specialist grease manufacturing company, that has been in existence in South Africa since 1921, was also acquired by Fuchs PetroLub AG and merged with the local Fuchs operations. All trading operations ceased in Century Oils (Pty) Ltd and Noxal Company (Pty) Ltd, and the latter companies currently only hold property.



Page 36 of 66

Siccode 332 & 63500

Nature of Business

Fuchs Lubricants (South Africa) (Pty) Ltd is the largest independent manufacturer and distributor of specialised automotive and industrial lubricants and greases, supplying clients in the automotive and mining industries. The company also undertakes the manufacture of Valvoline, Case and New Holland products on a toll blending basis. Brand names utilised include WM Penn, Fuchs, Titan, Reniso, Planto, Silkolane, Lublex, Renolin and Ceplatyn. Clients include Valvoline SA, Special Products, The Oil Shoppe, Harmony Gold Mining Company an d Fincham Industrial Supplies. Nr. of Employees

117

Banks


Auditors

KPMG Inc



Page 37 of 66

Siccode 332 & 63500

GERM AFRICA (PTY) LTD

Reg. Number: 1938/011133/07 VAT Number: 4880118569 BEE Rating: Level 4

Updated: 2012-02-21

Postal Address:

Physical Address:

PO BOX 2, Linmeyer

3 Sandown Valley Crescent, Benmore

2105

Gauteng, 2010

Tel:

+27 11 435 0348

Email:

Fax.:

+27 11 435 4059

Website:

www.germafrica.co.za

Branches Branch

Area

Durban Branch

Kwazulu- Natal

Head

Tel

Management Name

Position

Email

Appointed

Ms C Gomes

Director

2011-12-05

Mr JC Haslam

Director

2011-12-05

Mr RJC Haslam

Director

2011-12-05

Mr DB Mulinder

Director

1977-09-12

History of Business

Germ Africa (Pty) Ltd was established in May 1938 as Germ Lubricants Africa (Pty) Ltd. The name was changed to Germ Africa (Pty) Ltd in December 1996. Nature of Business

Germ Africa (Pty) Ltd is involved in the importation, blending and distribution of specialised industrial lubricants in the Southern African region. It operates three divisions namely, Industrial Lubricants, Filtration and Pumps. Nr. of Employees

27

Banks


Auditors

Horwath Leverton Boner

Distribution Rights

Caltex, Chevron, Techron, Texaco Subsidiaries, Associates & Investments Name

Filterwell Industrials (Pty) Ltd


Percentage

100.00


Page 38 of 66

Siccode 332 & 63500

H AND R SOUTH AFRICA (PTY) LTD

Reg. Number: 2004/004800/07 VAT Number: 4130213079

Updated: 2012-02-03

Postal Address:

Physical Address:

PO Box 21575, Bluff

113 Trinidad Road, Island View

4036

Bluff, 4052

Tel:

+27 31 466 8700

Fax.:

+27 31 466 8716

Email:

[email protected]

Website:

www.hur.com


Percentage

H & R Wasag AG

100.00

Management Name

Position

Mr Neils Heinz Hansen

Group Chief Executive Officer

2004-07-01

Mr Deyar Natha


2006-07-01

Mr Stephan James Parkinson Non-Executive Director

2007-07-02

Mr Rudi van Niekerk

Mr Clive Richard Wood

Sales & Marketing Manager Regional Chief Executive Officer

Email

Appointed

rudi.vanniekerk@ hur.com [email protected] 2009-01-28

History of Business

H and R Global Special Products (Pty) Ltd was established in June 20 04, when the operations of Special Products (Division of BP South Africa), were acquired and incorporated into a shelf company named Danman Investments Five (Pty) Ltd, changing the name to H and R Global Special Products (Pty) Ltd. The company underwent a name change to H and R South Africa (Pty) Ltd on 16 April 2007. Nature of Business

H and R South Africa (Pty) Ltd is involved in the manufacture and wholesale of core petroleum products, comprising: ♦

Base oils

♦

Petroleum jelly

♦

Process oils

♦

Agricultural spray oils

♦

Wax products



Page 39 of 66

Siccode 332 & 63500

Nr. of Employees Banks

36 Nedbank Ltd (a division of the Nedbank Group Ltd); Standard Bank of South Africa Ltd

Auditors

PricewaterhouseCoopers Inc.

Estimated Profit

R20.4m (Net)

Target Market

Supplies products to the following industries: ♦

Agricultural

♦

Personal Care

♦

Pharmaceutical

♦

Petroleum

Brandnames

AMPRON, Dussek Campbell, MEDSO, PIONIER, TUDALEN, VIVASHIELD, VIVATEC



Page 40 of 66

Siccode 332 & 63500

INDY OIL SA (PTY) LTD

Reg. Number: 1999/016319/07 VAT Number: 4870186444 BEE Rating: Level 8 Empowerdex

Updated: 2012-02-03

Postal Address:

Physical Address:

P O Box 620, Milnerton

4 Platinum Road, Milnerton

7435

7441

Tel:

+27 21 552 2330

Fax.:

+27 21 552 2879

Email:

[email protected]

Website:

www.indyoil.co.za

Branches Branch

Area

Head

Tel

Indy Oil Durban

KwaZulu-Natal

Ian Cooney

+27 31 944 1923

Indy Oil Johannesburg

Gauteng

Adam Williamson

+27 11 392 3111


Percentage

The Scarborough Family Trust

100.00

Management Name

Position

Mr Ian Cooney

Branch Manager - Durban

Mr Robbie Diamond

Sales Manager

Mr Howard Edwards

Financial Manager

Ms Jacqueline Yvonne Pothecary Mr Trevor Hayward Pothecary Mr Adam Williamson

Email

Appointed

[email protected]

Executive Director Executive Director Branch Manager: Johannesburg

History of Business

Indy Oil SA (Pty) Ltd was started in September 1999 utilising a shelf entity n amed Fullimput 226 (Pty) Ltd for registration purposes and the name changed to Indy Oil SA (Pty) Ltd. Nature of Business

Indy Oil SA (Pty) Ltd is involved in the man ufacture of automotive oils and industrial lubricants, as well as chemical cleaners and organic oils which are distributed in the Eastern and Western Cape as well as Gauteng and KwaZulu-Natal.



Nr. of Employees

57

Banks


Auditors

RA Frith

Brandnames

Indy Oil Trademarks

Indy Oil


Page 41 of 66


Page 42 of 66

Siccode 332 & 63500

KZN OILS (PTY) LTD


Updated: 2012-02-06

Postal Address:

Physical Address:

PO Box 74134, Rochdale Park

397 North Coast Road, Briardene

4034

4051

Tel:

+27 31 570 0550

Fax.:

+27 31 570 0522

Email:

[email protected]

Website:

www.kznoils.co.za

Branches Branch

Area

Head

Tel

KZN Oils - Brakpan

Gauteng

+27 11 8131502

KZN Oils - Briardene Warehouse

KwaZulu-Natal

+27 31 5700533


Percentage

Mr R Reddy

74.00

Phaphama

26.00

Management Name

Position

Email

Mr Jack (Sundro) Moodley

Financial Manager

[email protected]

Mr Shaun Naidoo

National Sales Manager

Ms Viveena Naidu


Mr Suren Padayachee

Call Centre Manager

Mr Rajendran (Rajen) Reddy Chief Executive Officer

[email protected]

Appointed

2001-09-10

History of Business

KZN Oils (Pty) Ltd was established on the 10 September 2001 when the operations of KZN Oils & Fuel Distributors cc, which had been in operation since May 1997, were acquired and incorporated into the company. Nature of Business

KZN Oils (Pty) Ltd is involved in the wholesale and distribution of industrial, marine and automotive fuel and oil. The company operates in KwaZulu-Natal and Gauteng. Nr. of Employees Empowerment Stake Banks

84 100% Standard Bank of South Africa Ltd



Page 43 of 66

Siccode 332 & 63500

Auditors

Deloitte & Touche

Brandnames

KZN Oils Subsidiaries, Associates & Investments Name

KZN Bunkers (Pty) Ltd


Percentage

100.00


Page 44 of 66

Siccode 332 & 63500

LUBRITENE (PTY) LTD


Updated: 2012-02-17

Postal Address:

Physical Address:

Private bag X97, Halfway House

Gleneagles, Fairway Office Park

1685

52 Grosvenor Road, Bryanston, 2021

Tel:

+27 11 976 2944

Fax.:

+27 11 393 1707

Email:

[email protected]

Website:

www.lubritene.co.za

Branches Branch

Area

Head

Tel

Lubritene

Zambia

Lubritene

Ghana

Lubritene

Botswana

+26 7 312 1606

Lubritene

Kwazulu-Natal

+27 72 385 6780

Lubritene

Mpumalanga

+27 13 692 8577

Lubritene

Northern Cape

+27 53 712 1673

Lubritene

Western Cape

+27 27 718 1072

+09 2602 311032

Management Name

Position

Email

Appointed

Mr R Burns

Engineer

1999-03-01

Mr D Cutter

Engineer

1999-03-01

Mr CMPD Dalle Carbonare

Operations Director

1996-06-04

Mr Christiaan (Tiaan) Oosthuizen Sales Director

2006-09-01

Mr Pierre Van der Riet

2010-11-01

Director

History of Business

Lubritene (Pty) Ltd was established on 20 February 1996 when a division of Chemrite Southern Africa (Pty) Ltd known as the Chemrite Lubricants Division was acquired and incorporated into the new legal entity. A shelf company named Henbase 3106 (Pty) Ltd was utilised for registration purposes and the name was changed to Lubritene (Pty) Ltd. Nature of Business

Lubritene (Pty) Ltd specialises in the manufacture of high performance greases, compounds and oils. The company focuses on the development, manufacture and distribution of a wide variety of grease types, such as aluminium complex, lithium, lithium complex, clay base and other types and mixes.



Banks


Auditors

Colin Smith and Company


Page 45 of 66


Page 46 of 66

Siccode 332 & 63500

NATIONAL PETROLEUM REFINERS OF SOUTH AFRICA (PTY) LTD

Trading As: NATREF Reg. Number: 1967/012994/07 VAT Number: 4340117193 BEE Rating: Not Finalised

Updated: 2012-01-30

Postal Address:

Physical Address:

PO Box 234, Sasolburg

Admin Building, Block B, Jan Haak Road

1947

Industrial Sites, Sasolburg, 1947

Tel:

+27 16 940 9111

Email:

Fax.:

+27 16 940 2503

Website:

www.sasol.com


Percentage

Sasol Oil (Pty) Ltd (Held by Sasol Ltd - 75%)

63.64

TOTAL South Africa (Pty) Ltd

36.36

Management Name

Position

Email

Appointed

Mr Line Bobillo

Director

Mr Jabulani Cele

Operations Manager

Mr Abraham (Bram) de Klerk

Director

Mr C Dupre

Director

2010-01-01

Mr Louis Fourie

Managing Director

2010-01-05

Ms Nazima Ismail

Employment Equity Manager

Mr Jacob Malgas


Mr Pierre Noailly

Manufacturing Director

Mr Maurice Radebe

Director

Mr Gert Rostoll

Engineering Manager

Mr Jean-Denis Royere

Director

Mr Giullean (Lean) Strauss

Director

Mr Jacobus van Wyk

Director

Ms Carine van Zyl

Financial Manager

Mr Wilhelm Wasserman

Operations Manager

2010-11-05

2007-01-01

History of Business

National Petroleum Refiners of South Africa (Pty) Ltd t/a Natref was established in December 1967.



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Nature of Business

National Petroleum Refiners of South Africa (Pty) Ltd t/a Natref undertakes the refining of crude oil, on behalf of its shareholders, for a processing fee. It is equipped with sophisticated conversion units which transform crude oil to petrol, jet fuel and diesel. Crude oil is transported to Sasolburg by means of a pipeline which runs from Durban. The refinery produces approximately 108 500 barrels of fuel per day. Nr. of Employees

573

Secretary

Sasol Group Services (Pty) Ltd

Banks

ABSA Bank Ltd

Auditors

KPMG Inc

Production Capacity

108 500 barrels of fuel per day Subsidiaries, Associates & Investments Name

Percentage

Nexsum Leasing (Pty) Ltd

100.00

Twente Woonstelle (Pty) Ltd

100.00



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PETROLEUM MARKETING ORGANIZATION (PTY) LTD

Trading As: PETROMARK Reg. Number: 1972/004220/07 VAT Number: 4710106222 BEE Rating: Level 7 BEE Professional Assignments

Updated: 2012-02-15

Postal Address:

Physical Address:

PO Box 713, Edenvale

2 Foreman Road, Spartan Ext 3

1610

Kempton Park, 1619

Tel:

+27 11 392 8740

Fax.:

+27 86 688 6601

Email:

[email protected]

Website:

www.petromark.co.za

Branches Branch

Area

Head

Tel

Petromark KwaZulu-Natal

KwaZulu-Natal

+27 31 701 6677

Petromark North West

North West

+27 18 462 4551

Petromark Tshwane

Gauteng

+27 12 653 7976


Percentage

The Seahound Trust

56.00

Directors

44.00

Management Name

Position

Email

Appointed

Ms Tinky Moolman

Financial Manager

Mr Alan Taten Robertson

Managing Director

2000-09-01

Mrs Carol Angela Robertson


2003-10-01

tinky@ petramark.co.za

History of Business

Petroleum Marketing Organization (Pty) Ltd t/a Petromark was established in April 1972 . Nature of Business

Petroleum Marketing Organization (Pty) Ltd t/a Petromark m anufactures and distributes compounded and blended lubricating oils, degreasers, hand cleaners and vehicle cleaners. The oils are mixed with additives. The company supplies the industrial and automotive industries and markets fuel. Nr. of Employees

42

Banks


Auditors

Johan Zwarts & Associates



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van Flymen & Associates

Brokers Turnover

[2011] R60.0m (Est) (As per company)

Brandnames

Anti-Flam Hydro, Anti-Splatter, Aquaclean, AquaTruck Plus, Borate Gear Oil, Calibrating Fluid S, Complube, Die Paste, Drawing Oil, Ferrotap, Flushing Oil, Guideway Oil, Gun Oil 22, Heat Transfer Oil, High Speed Spindle Oil, Honing Oil, Hydraulic Oil, Industrail Gear Oil, Inhibited IGO, Inhibited Mineral Oil, Lapping Oil, Parasolve, Petroforge, Petrogrit, Petromark, Petroquench Oil, Petrosol, Petrosyn, PetroTech, Petrozorb, Powerlube, Process Oil, Protector Coat, Rockdrill Oil, Schrader Cut, Solclean Red, Soluble Grinding Fluid, Spark Erosion Fluid, Straight Mineral Gear Oil, Super Outboard Oil, Super Two Stroke, Superlube, Syntol, Thermo Clean, Threadcut, Tractor Tranmission, Transfluid, Unisol, White PJ Trademarks

Complube, Petromark, Powerlube



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PETROLEUM OIL & GAS CORPORATION OF SOUTH AFRICA (PTY) LTD, THE

Trading As: PETROSA Reg. Number: 1970/008130/07 VAT Number: 4320103502 BEE Rating: Level 2 Empowerdex

Updated: 2012-02-21

Postal Address:

Physical Address:

Private Bag X5, Parow

151 Frans Conradie Drive, Parow

7499

Cape Town, 7500

Tel:

+27 21 929 3000

Fax.:

+27 21 929 3144

Email:

[email protected]

Website:

www.petrosa.co.za

Branches Branch

Area

Head

Tel

PetroSA Europe BV Rotterdam

Netherlands

Mr Sastri Gounden

+27 31(0) 10 400 7353


Percentage

Department of Minerals & Energy via CEF (Pty) Ltd

100.00

Management Name

Position

Mr Mputumi Damane

Non- Executive Director

Ms Nonhlanhla Jiyane


Mr Mohamed Kajee

Chairman & Non-Executive Director

Email

Appointed

2011-03-01 2007-07-01

Ms Esther Latelape


2011-03-01

Ms Linda Makatini


2010-01-01

Mr Zingisa Mavuso

Alternate Non-Executive Director

2009-04-09

Ms Nondumiso Medupe


2010-01-01

Dr Benny Mokaba


2011-03-01

Mr Andrew (Connie) Molusi


2011-03-01

Chief Financial Officer

2003-02-09

Mr Nkosemntu Gladman Nika Ms Nosizwe Nokwe

President & CEO

Dr Zavareh Rustomjee


2009-02-09

Mr Yekani Tenza


1999-01-12



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Mr Hilton Trollip


Mr Dalikhaya (Rain) Zihlangu Non-Executive Director

2006-01-12

Mr Musa Zwane

2011-03-01


History of Business

The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd t/a PetroSA is South Africa’s national oil company. It was formed in Jan uary 2002 from the merger of three previous entities, Mossgas (Pty) Ltd, Soekor E&P (Pty) Ltd and parts of the Strategic Fuel Fund Association. Nature of Business

The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd t/a PetroSA are involved in the exploration and production of oil and gas, and the production and marketing of synthetic fuels and petrochemicals. The refinery produces approximately 45 000 barrels o f fuel per day.

Major clients include Caltex, Engen, Sasol,Shell, International Tullow, Chinese national oil companies. Nr. of Employees Empowerment Stake

1 836 100%

Secretary

Adv Sindiso Ngaba

Banks


Auditors

Auditor-General of South Africa

Turnover

[2011] R10,565.0m (AR2011)

Estimated Profit

R405.4m (Operating)


PetroSA has an HIV/AIDS policy which offers employees voluntary testing and counselling annually. The policy has been fully embraced company-wide, there is no effect evident on the bottom-line. The policy was established in 2003. Influencing Factors

Sufficient feedstock reserves (oil or gas), therefore re-investment towards reserves addition necessary. Cleaner PetroSA products a com petitive advantage. PetroSA’s GTL refinery produces world standard ultra-clean, low sulphur, low aromatic synthetic fuels and high value products converted from natural methane-rich gas and condensate using a unique GTL Fischer Tropsch Technology. Oil price and rand/dollar exchange rates in the case of South Africa. Competition and Barriers

Very competitive industry characterised by high capital requirements and high risk exploration with huge uncertainties. The company’s biggest internal challenge is the continued reliance on a single source of income, namely the GTL re!nery .



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Prevailing Conditions in the Industry

Volatile commodity prices as well as exchange rates. Increased resource nationalisation. Low margins especially downstream. Production Capacity

45 000 barrels of fuel per day Subsidiaries, Associates & Investments Name

Brass Exploration Unlimited (Nigeria) GTL.F1 AG (Switzerland)

Percentage

100.00 37.00

Petroleum Oil & Gas Corporation of South Africa (Namibia) (Pty) Ltd

100.00

PetroSA Brass (Pty) Ltd

100.00

PetroSA Egypt (Pty) Ltd

100.00

PetroSA Equatorial Guinea (Pty) Ltd

100.00

PetroSA Europe BV

100.00

PetroSA Gryphon Marin Permit (Pty) Ltd

100.00

PetroSA Iris (Pty) Ltd

100.00

PetroSA Nigeria Ltd

100.00

PetroSA North America

100.00

PetroSA Sudan (Pty) Ltd

100.00

PetroSA Synfuel International (Pty) Ltd

100.00

PetroSA Themis (Pty) Ltd

100.00

Sud-Chemie Zeolites (Pty) Ltd


37.00


Page 53 of 66

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PISTON POWER CHEMICALS CC

Reg. Number: 1998/050507/23 VAT Number: 4950177719 BEE Rating: Level 1

Updated: 2012-02-17

Postal Address:

Physical Address:

PO Box 90, Desainagar

316 Balfour Road, Jacobs

4405

4052 +27 31 468 6825

Tel:

Fax.:

+27 31 468 6826

Website:

www.pistonpower.co.za

[email protected]; Email:

[email protected]; [email protected]

Branches Branch

Area

Head

Tel

Piston Power Chemicals

Johannesburg

+27 11 3971225

Piston Power Chemicals

Cape Town

+27 21 5518939


Percentage

Members

100.00

Management Name

Position

Email

Appointed

Mr Krish Andhee

Director

2007-11-07

Mr U Andhee

Director

1988-08-31

Mr Ray Maharaj

Director

1998-08-31

History of Business

Piston Power Chemicals cc was established in 1998. Nature of Business

Piston Power Chemicals cc manufactures lubricants for the automotive, agricultural and in dustrial industries. Nr. of Employees Empowerment Stake

18 100%

Banks

Nedbank Ltd (a division of the Nedbank Group Ltd)

Auditors

Nerisha Ishwarlal Chablal



Production Capacity

Blending capacity of 25-50 tons per day. Brandnames

Agri Power Super, Agri Power Universal, Chain Power, Piston Power, Super 2T


Page 54 of 66


Page 55 of 66

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SASOL WAX (DIVISION OF SASOL CHEMICAL INDUSTRIES LTD)

Reg. Number: 1968/013914/06 VAT Number: 4360224200 BEE Rating: Level 4 Empowerdex

Updated: 2012-02-09

Postal Address:

Physical Address:

PO Box 1, Sasolburg

Carl Bosch Road, Chem City 2

1947

Sasolburg, 1947

Tel:

+27 16 960 2342

Fax.:

+27 16 960 2310

Email:

[email protected]

Website:

www.sasolwax.com

Branches Branch

Area

Sasol Wax - Durban Manufacturing Plant

KwaZulu-Natal

Sasol Wax - Sasolburg Manufacturing Plant

Free State

Head

Tel


Percentage

Sasol Ltd (Held by Government Employees Pension Fund - 13.3%; Industrial

100.00

Development Corporation of South Africa Ltd - 7.9%) Management Name

Position

Email

Appointed

Mr Jacobus Francois Conradie Director

2007-11-07

Mr André Marinus de Ruyter

2010-02-04

Mr Johan du Preez Ms Michelle du Toit Ms Gerda Freitag Mr Nicolas (Nico) Jacobus Janse van Rensburg Ms Kandimathie Christine Ramon Ms Carine van den Berg

Executive Chairman Divisional Managing Director Director Financial Manager: Accounting Financial Manager

2007-11-13 [email protected] nico.jansevanrensburg@ sasol.com

2009-05-27

Director

2009-07-13

Director

2007-11-13

History of Business

Sasol Wax originally began trading in September 1963 and was divisionalised under Sasol Chemiese Nywerhede Bpk in January 2006.



Page 56 of 66

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Nature of Business

Sasol Wax is involved in the manuf acture of wax and paraffin, which is retailed to local candle manufacturers and also exports wax to overseas clients who manufacture inks, adhesives and paraffin. Nr. of Employees

500

Secretary

Mr Nico Janse van Rensburg

Banks

ABSA Bank Ltd

Auditors

KPMG Inc

Turnover

[2011] R2.5m (Est) (As per company)

Influencing Factors

The exchange rate as there is a lot o f international trade. Brandnames

AdSperse, EnHance, eWax, HydroWax, Merkur, Sasobit, Sasolwax, Sasolwax BituGlide, Vara



Page 57 of 66

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SHELL & BP SOUTH AFRICAN PETROLEUM REFINERIES (PTY) LTD

Trading As: SAPREF Reg. Number: 1960/000007/07 VAT Number: 4580102442 BEE Rating: Level 3 Empowerdex

Updated: 2012-02-17

Postal Address:

Physical Address:

PO Box 3179, Durban

Refinery Road, Prospecton

4000

4110

Tel:

+27 31 480 1911

Fax.:

+27 31 468 1913

Email:

[email protected]

Website:

www.sapref.com


Percentage

BP Southern Africa (Pty) Ltd (Held by BP Pl c - 75%; Mineworkers Investment Company (Pty) Ltd - 17.5%; Womens Development Bank - 7.5%) Shell South Africa Holdings (Pty) Ltd

50.00 50.00

Management Name

Position

Mr Mike Baker

Director

Ms Bridget Bishenden

Legal Services Manager

Mr Gerard Derbesy

Director

Mr Romanus Dindi

ICT Manager

Mr Moosa Karodia

Technical Manager

Ms Lindiwe Khuzwayo

Sustainable Development Manager

Mr Ncazane Mabena

Director

Mr Julius Maile

Chief Internal Auditor

Mr Andrew Mckay

Acting Human Resources Manager

Mr Albert Mobaso

Maintenance Manager

Mr Bonang Francis Mohale


Mr Robin Mooldijk

Manageing Director

Mr Pravin Motilal

Mr Colin Muthusami

Lead Engineer Projects / Development Financial Manager and Company Secretary

Mr Abhay Raichoora

Director

Ms Lori Ryerkerk

Director


Email

Appointed

2009-11-03


Page 58 of 66

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Ms Donna Tarka

Director

Mr Garry Tate

Maintenance Manager

Mr John van Belkum

HSE Manager

Mr Rodney Youldon

Hydrocarbons Manager

History of Business

South African Petroleum Refineries (Pty) Ltd was established in January 19 60 and underwent a name change to Shell & BP South Afri can Petroleum Refineries (Pty) Ltd in May 196 2. In 1963, a joint venture between Shell and BP, known as SAPREF, commissioned a refinery in Durban. By 1966, Caltex had commissioned a refinery in Cape Town. In 1967, Shell and BP, in partnership with Federale Volksbeleggings, built the first base-oil refinery, which was adjacent to the SAPREF plant. Nature of Business

Shell & BP South African Petroleum Refineries (Pty) Ltd t/a SAPREF is the largest complex oil refinery in South Africa and produces leaded and unleaded fuels, low sulphur diesel, lubricants, asphalt product slate, aliphatic hydrocarbon solvents and industrial processing oils and sulphur. The company produces approximately 180 0 00 barrels of fuel per day. Oil, brought fro m countries in the Middle East, Europe and Africa, is discharged by tankers at a single buoy mooring (SBM), about 2.5 kilometres off the coast near Prospecton and enters SAPREF through an underground pipeline. The oil is stored in tanks, from where it is fed into the refinery. Nr. of Employees Empowerment Stake

750 25%

Banks


Auditors

PricewaterhouseCoopers Inc

Production Capacity

180 000 barrels of fuel per day Brandnames

BP, Shell Market Share

35% (Refining capacity) General Comment

A project currently being implemented at SAPREF is the replacement project of 7 product pipelines. A detailed annual maintenance programme is aimed at upholding international safety standards and requires that sections of the plant are shut down fro m time to time for inspection. This programme also oversees any repairs and improvements that need to be carried out. Regular maintenance is not only a legal requirement, but is also stipulated by the shareholders Shell and BP, who inspect and audit practices and standards.



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SPANJAARD LTD

Reg. Number: 1960/004393/06 JSE Code: SPA VAT Number: 4350106318 BEE Rating: Level 7 BEE Verification Agency

Updated: 2012-02-03

Postal Address:

Physical Address:

PO Box 7294, Johannesburg

748-750 Fifth Street, Wynberg

2000

2090

Tel: Email:

+27 11 386 7100 [email protected]; [email protected]

Fax.:

+27 11 786 5685

Website:

www.spanjaard.biz

Divisions Division

Area

Head

Tel

Metal Powders

Gauteng

+27 11 386 7100

Special Lubricants and Allied Chemicals

Gauteng

+27 11 386 7100


Percentage

Spanjaard Group Ltd

55.30

Ms E Nepgen

8.70

Mr RJW Spanjaard

8.40

Management Name

Position

Ms Judy Born

Consumer Sales Manager SA

Mr Graham Frank Cort

Executive Director

2006-02-06

Mr Clayton Greer

Industrial Sales Manager SA

2010-06-01

Ms Shaila Hari

Mr Bernard Law Montgomery

Independent Non-Executive Director Independent Non-Executive Director

Email

Appointed

2011-11-01

2005-11-23

Ms Elista Nepgen

Executive Managing Director

2010-07-23

Mr Clinton Keith Tew Palmer

Executive Director

2008-10-07

Mr Stephen Albert Pretorius

Executive Director: Manufacturing

2011-01-07

Executive Chairman

1960-12-02

Mr Robert Johannes Willem Spanjaard



Page 60 of 66

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Dr Daniel Petrus

Lead Independent Non-Executive

van der Nest

Director

Mr Hendrik Jacobus

Executive Financial Director

van Heerden

2006-11-01

2010-07-23

History of Business

RJW Spanjaard and Company Ltd was registered in December 1960. The company underwent a name change to Molyslip Ltd and in October 1987, the name changed to Spanjaard Ltd. On 1 January 1987, the company listed on the JSE. Nature of Business

Spanjaard Ltd operates as a manufacturer and distributor of specialised lubricants and allied chemical products for the industrial, automotive, marine and mining mark ets. Contract packaging of the company's range of lubricants is done fo r private labels. The company also specialises in aerosol food and aerosol cosmetic products. Metal powder products are also manufactured through two of its subsidiaries. Nr. of Employees

107

Secretary

Mrs Margaret Bond

Banks


Auditors

Mazars

Attorneys

Bowman Gilfillan

Brokers

Imara S.P. Reid (Pty) Ltd

Turnover

[2011] R102.1m (AR2011)

Estimated Profit

R4.8m (Net)

Transfer Secretaries Name

Physical Address

Postal Address

Computershare Investor Services

70 Marshall Street,

PO Box 61051,

(Pty) Ltd

Johannesburg, 2001

Marshalltown

Brandnames

Coppermet, Molyslip, Spanjaard Trademarks

Molyslip, Spanjaard Distribution Rights

Molyslip, Spanjaard


Tel


Page 61 of 66

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Subsidiaries, Associates & Investments Name

Percentage

Bronzmet (Pty) Ltd

100.00

Coppermet (Pty) Ltd

100.00

Molyslip Zimbabwe (Pvt) Ltd

100.00

Slip Products (South Africa) (Pty) Ltd

100.00

Spanjaard EU BV (Incorporated in The Netherlands)

100.00

Spanjaard Manufacturing (Pty) Ltd (Incorporated in Australia)

100.00

Spanjaard UK Ltd (Incorporated in the United Kingdom)

100.00

Torpedo Investments (Pty) Ltd

100.00



Page 62 of 66

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TOTAL SOUTH AFRICA (PTY) LTD


Updated: 2012-02-17

Postal Address:

Physical Address:

PO Box 579, Saxonwold

Total House, 3 Biermann Avenue

2196

Rosebank, 2146

Tel:

+27 11 778 2000

Email:

Fax.:

+27 11 778 2001

Website:

www.total.co.za


Percentage

Total Overseas Holding (Pty) Ltd

50.10

Main Street 87 (Pty) Ltd

25.00

Industrial Partnership Investments Ltd

24.90

Management Name

Position

Mr Line Bobillo

Director

2008-09-18

Business Executive

2002-03-08

Director

2008-09-18

Mr Edwin de la Harpe Hertzog Director

1990-06-01

Mr Olivier Alain Devouassoux

Director

2008-03-26

Director

2008-12-01

Mr Mkhuseli (Richman) Faku

Director

2003-05-23

Ms Zodwa Manase

Director

2006-09-28

Mr Authur Bhuti Mashaitshidi

Director

2009-03-24

Ms Emily Patience Mekwa

Director

2009-09-23

Mr Jean-Denis Royere

Director

2007-12-07

Mr Neville John Williams

Director

2011-04-01

Mr Alain Georges Jean Champeayx Mr Leon Crouse

Ms Gugu Yvonne Yolande Ditodi

Email

Appointed

History of Business

Total South Africa (Pty) Ltd was established in December 1954. In October 200 0, the holding company in France amalgamated with Fina Lubricants and Elf Oils and underwent a name change to Totalfinaelf, however, reverted to Total Overseas Holding (Pty) Ltd in June 2003.



Page 63 of 66

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Nature of Business

Total South Africa (Pty) Ltd is involved in the manufacture, marketing and distribution of petroleum products as well as the manufacture and distribution of lubricating oils and grease under the brand name Total. Nr. of Employees

800

Banks

ABSA Bank Ltd

Auditors

Ernst & Young Inc


Total commits itself to the following: ♦

HIV positive employees will be governed by the same contractual obligations as all other employees;

♦

HIV/AIDS education and awareness training will be made available to all employees;

♦

Pre and post-test counselling services will be provided for employees wishing to be tested or for those who are infected with the virus;

♦

TOTAL will ensure that where necessary/appropriate, affected employees and their colleagues and or line managers receive appropriate advice and guidance should such a colleague wish to disclose their status;

♦

The company will also ensure that affected employees are referred to appropriate professionals for medical and or counselling services and

♦

Consultation with affected employees in managing their illness will also be ensured.

Competition and Barriers

Clients are service stations and comm ercial and agricultural industries.


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