Petrol Oil Sector Who Owns Who in South Africa

Essential Business InformationEssential Business Information

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DIRECTORS: MAUREEN MPHATSOE (CHAIRPERSON), JIM FICK (EXPERIAN), GLEN BALS (EXPERIAN), ANDREW MCGREGOR (MANAGING) © Copyright Who Owns Whom (Pty) Ltd

MANUFACTURE OF PETROL AND LUBRICANTS Siccode 332

February 2012

COMPILED BY: Guy McGregor

[email protected]

Manufacture of Petrol and Lubricants Contents Siccode 332 & 63500

© Copyright Who Owns Whom (Pty) Ltd

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 25

ORGANOGRAM 26 COMPANY PROFILES 28

BLUE CHIP LUBRICANTS (PTY) LTD 28 CHEVRON SOUTH AFRICA (PTY) LTD 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 38 INDY OIL SA (PTY) LTD 40 KZN OILS (PTY) LTD 42 LUBRITENE (PTY) LTD 44 NATIONAL PETROLEUM REFINERS OF SOUTH AFRICA (PTY) LTD 46 PETROLEUM MARKETING ORGANIZATION (PTY) LTD 48 PETROLEUM OIL & GAS CORPORATION OF SOUTH AFRICA (PTY) LTD, THE 50 PISTON POWER CHEMICALS CC 53 SASOL WAX (DIVISION OF SASOL CHEMICAL INDUSTRIES LTD) 55 SHELL & BP SOUTH AFRICAN PETROLEUM REFINERIES (PTY) LTD 57 SPANJAARD LTD 59 TOTAL SOUTH AFRICA (PTY) LTD 62 VALVOLINE SOUTH AFRICA (PTY) LTD 64

Manufacture of Petrol and Lubricants Page 1 of 66 Siccode 332 & 63500


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 Sources of Crude Oil (2010) 000' of metric tons

% of total

Iran 5528 29%Saudi Arabia 4584 24%Nigeria 3594 19%Angola 3409 18%United Arab Emirates 1018 5%Argentina 297 2%Iraq 244 1%Spain 134 1%Switzerland 126 1%Cote d'Ivoire 88 0%Oman 72 0%Mozambique 44 0%Norway 37 0%United States of America 36 0%Equatorial Guinea 35 0%Cuba 9 0%TOTAL 19255 100%Source: South African Revenue Services



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 % of the Barrel

Gases LPG 2.0

Light Distillates Petrol 30.5

Middle Distillates Paraffin 2.9

Jet Fuel 6.7

Diesel 31.7

Residuals 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



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

Diesel

5,0

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 60% of the sales and the industrial market

comprising the balance of 40%. The total 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



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



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 holiday 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 sub-

leased 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.



The Oil Industry Supply/Activity Chain

Upstream Sector

Trad

ing

Tran

sportation

Supp

ly &

Distribution

Who

lesale

Marketing

to

end users

Refin

ing

Prod

uctio

n

Develop

men

t

Downstream Sector

Exploration

Oil Industry value chain

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.



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%

Total TotalFinaElf 50,1% 36% of Natref

Rembrandt 24,9%

Tosaco 25%

Sasol Oil Sasol Ltd 100% 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.



South African Refineries, their Capacities and Locations

South Africa

Botswana

Lesotho

Namibia

Zimbabwe

Mozambique

Walvis Bay

Port ElizabethEast London

Mossel Bay

Durban

Richards Bay

MaputoNATREF 108 kbpd(Sasol & Total)

Sasolburg

Kudu Gas Field

Pande & TemaneGas Fields

Mossgas Field

Cape Town

Windhoek

Gaborone

Saldahna Bay

SBM

Mossgasequiv.

45 kbpd

Engen 120 kbpd

Sasol 2&3 eq 150 kbpd

Caltex 100 kpbd

SAPREF 180 kbpd (Shell & BP)

Swaziland

Crude Oil RefinerySynfuel PlantPipelinesMajor markets

0 500 km

Refinery Locations in South Africa

Johannesburg Witbank

[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.



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

Company Employees Revenue

Production

Capacity

(Barrels /day)

Oil

company Refinery Lubricants

Blue Chip Lubricants

(Pty) Ltd

30 X

Chevron South Africa

(Pty) Ltd

1 200 100 000 X X X

Deojay Petroleum KZN

(Pty) Ltd

10 X

Engen Petroleum Ltd 3 379 135 000 X X X

Fuchs Lubricants (South

Africa) (Pty) Ltd

117 X

Germ Africa (Pty) Ltd 27 X

H and R South Africa

(Pty) Ltd

36 X

Indy Oil SA (Pty) Ltd 57 X

KZN Oils (Pty) Ltd 84 X

Lubritene (Pty) Ltd X

National Petroleum

Refiners of South Africa

(Pty) Ltd

t/a NATREF

573 108 500

X

Petroleum Oil and Gas

Corporation of South

Africa (PetroSA)

1 836 R10,565.0m

(2011)

45 000

X X

Petroleum Marketing

Organization (Pty) Ltd

t/a Petromark

42

X

Piston Power Chemicals

cc

X

Sasol Wax

(Div of Sasol Chemical

Industries Ltd)

500 R2.5m

(2011)

X



Company Employees Revenue

Production

Capacity

(Barrels /day)

Oil

company Refinery Lubricants

Shell & B P South African

Petroleum Refineries

(Pty) Ltd

730 180 000

X X

Spanjaard Ltd 107 R102.1m

(2011)

X

Total South Africa

(Pty) Ltd

800 X

Valvoline South Africa

(Pty) Ltd

15 X

4 STATE OF THE INDUSTRY

4.1 Local

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 FuelML 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 % of TotalPetrol 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 20 649 20 692 21 000 21 884 22 669 23 260 24 066 25 512 24 907 24 271 100.0%% Change 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 AAI 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.



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.



South African Refineries and Their Capacities

South African Refining Capacity (bbl/day)1992 1997 2007 2009 2017 Base 2017a 2017b 2017c 2017d

Sapref 120 000 165 000 180 000 180 000 180 000 360 000 180 000 180 000 360 000 Enref 70 000 105 000 125 000 125 000 125 000 125 000 Chevref 100 000 100 000 100 000 100 000 100 000 100 000 Natref 78 000 86 000 108 000 92 000 92 000 92 000 92 000 92 000 92 000 Secunda 150 000 150 000 150 000 150 000 150 000 150 000 150 000 150 000 150 000 PetroSA 45 000 45 000 45 000 45 000 45 000 45 000 45 000 45 000 Coega/Western Cape 400 000 310 000 250 000 Mafutha 80 000 TOTAL 563 000 651 000 708 000 692 000 692 000 872 000 867 000 857 000 852 000 ML/Annum 32 664 37 769 41 076 40 148 40 148 50 591 50 301 49 721 49 430 Imports/Biofuels ML/Annum 4 000 10 000 500 500 500 1 000 TOTAL 563 000 651 000 708 000 760 945 864 363 880 618 875 618 865 618 869 236

Refinery Expansion Scenarios

[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.



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 2010 2011 2012 2013 2014GDP 2.8 3.5 3.7 3.9 4Private Consumption 4.6 4.8 4.5 4.2 4.5Government Consumption 4.6 4 4 4 5Gross Fixed Investment ‐3.6 2 5 7 10Export Goods & Services 5.4 7 5 6 5Import Goods & Services 10.4 11 10 10 10Change in Stocks ‐0.5 1 1 0.5 0.5Domestic 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



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

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.

OUTGOING REGULATION

DEALER MARGIN 24.5 c/l

WHOLESALE MARGIN

ZONE DIFFERENTIAL

BFP

UNDERRECOVERY or OVERRECOVERY

GOVERNMENT DUTIES AND TAXES

Costs + 25% profit margin

15% ROA triggered outside 20% & 10%

Government

No competition between refiners and importers

DEALER MARGIN

Transnet tariffs; primary distr

SERVICE DIFFERENTIALCost recovery; seconry distr

Service Station DealerOil Companies

Oil CompaniesGovernment - Oil Industry collects

20% of all indirecttaxes

Changes as prices move in a month

Transnet andOil CompaniesCrude Oil &

Synthetic Fuel Producers

and Refiners

BeneficiariesMechanisms



New Proposed Oil Industry Regulatory Mechanisms 2011

[Source: DOE]

The process is being implemented, but is not expected to be fully applied until the end of 2012.

The following explains the current petrol price build up as at November 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

CURRENT REGULATION VS TASK 141 - November 2011

Wholesale Margin – 27.7 c/l

BASIC FUEL PRICE – 629.15 c/l

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

(Retail Op Margin – 59.7 c/l)

Secondary Distribution Margin – 8.4 c/l

Coastal Storage Margin – 1.4 c/l

Secondary Storage Margin – 12.6 c/l

TRANSPORT COST – PRIMARY 22.9 c/l

(DEALER MARGIN – 85.2 c/l)

Wholesale Margin – 54.1 c/l `

Service Differential 11.4 c/l

BASIC FUEL PRICE – 629.15 c/l

UNDERRECOVERY OR OVERRECOVERY

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

Zone Differential 22.9 c/l

CURRENT REGULATIONTASK 141 PROPOSED REGULATION

(Retail Investor Margin – 55.8 c/l)

UNDERRECOVERY or OVERRECOVERY

Petrol ULP 95

Difference 15c/lPump Price = 1077 c/l Pump Price = 1092 c/l

141



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

[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

Petrol Wholesale Margin

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005** 2006 2007 2008 2009 2010***MPAR return (%) (1,6) 3,4 8,7 13,9 12,0 9,2 6,8 8,8 9,7 7,3 4,0 3,8 1,9 9,72 21,22 _ _ _ _Indicated margin increase (c/l) 4,0 4,0 2,3 0,0 0,0 2,7 4,9 3,6 2,5 3,81 6,75 6,93 8,97 3,21 (4,21) _ _ _ _Increase granted (in succeeding year) _ 4,0 4,0 0,5 0,0 0,0 0,0 2,0 1,0 0,5 1,23 2,58 6,93 8.97 2,0 _ _ _ 5.4 6.2 3.0Margin at year end (c/l)* 5,6 9,6 13,6 14,1 14,1 14,1 14,1 16,1 17,1 17,6 18,8 21,4 28,3 37,3 39,3 39,3 39,3 39.3 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 system is being developed. ***The Minister of Minerals and Energy approved a wholesale margin increase of 3.0 c/l from 1 December 2010



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

[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.

2011 RSA c/litre Fuel tax

Customs & excise

Equali-sation fund levy

Pipeline Levy

Road accident

fund Slate levy DSML

Transport Recovery

LevyPump

Rounding TOTAL

Nov 177.5 4 - 0.15 80 - 10 3 -0.4 274.2564.7% 1.5% 0.1% 29.2% 3.6% 1.1% ‐0.1% 100.0%



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

[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.

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

FOB ValuesUSc/Ag

100% Spot

AG

Singapore

Shipping CostsFreightInsuranceLandingWharfageFinanceStorageDemurrage

Med

BFPSouth Africa



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

Lubricants Botswana Mala wi T anzania ZambiaML ML ML ML

2008 47 3 12 142009 40 5 9 16Retail 18% 21% 22% 20%Commercial 82% 79% 78% 80%

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.



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

South & East Africa Lubricants Estimated 2000 Market ShareBP CALT EX CFP ENGEN SHELL CAST ROL

Botswana Est Ma rke t Share 27.4% 14.8% 6.4% 20.4% 30.6% 0.4%BP Mobil Ca ltex T ota l Int.

Ma lawi Est Marke t Share 55.4% 29.0% 7.5% 8.1%BP P'Moc Mobil T ota l Moçacor Others

Moza mbique Est Marke t Share 57.9% 10.2% 12.8% 7.9% 0.7% 10.5%BP SHELL CALT EX ENGEN OT HER T OT AL

Namibia Est Marke t Share 17.5% 31.2% 22.7% 13.5% 8.7% 6.4%BP Agip Gapco Gapoil T ota l Na toil Elf Oil Mobil

T anzania Est Marke t Share 27.2% 40.8% 1.1% 4.7% 20.5% 0.4% 4.4% 0.8%BP Caltex Agip T ota l Mobil Jove nna Ody's Engen

Zambia Est Ma rke t Share 70.8% 11.0% 4.0% 5.0% 9.1% 0.2% 0.0% 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 Statistics 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

SEYCHELLES $ 10 290 $ 0.8 3.0% 0.1 25.0% 73 0.5BOTSWANA $ 6 470 $ 13.0 -1.0% 1.9 17.0% 51 581.7MAURITIUS $ 6 400 $ 8.7 5.0% 1.3 8.0% 72 2.0RSA $ 5 820 $ 276.8 3.0% 48.7 11.0% 50 1 219.1NAMIBIA $ 4 200 $ 8.6 3.0% 2.1 12.0% 53 824.3ANGOLA $ 3 450 $ 83.4 15.0% 18.0 20.0% 47 1 246.7SWAZILAND $ 2 520 $ 2.6 2.0% 1.2 3.0% 46 17.3LESOTHO $ 1 080 $ 1.6 4.0% 2.0 10.0% 43 30.4ZAMBIA $ 950 $ 14.3 6.0% 12.6 11.0% 45 752.6TANZANIA $ 440 $ 20.5 7.0% 42.5 9.0% 55 945.1MADAGASCAR $ 410 $ 9.0 7.0% 19.1 10.0% 60 587.0MOZAMBIQUE $ 370 $ 9.7 6.0% 21.8 7.0% 42 801.6MALAWI $ 290 $ 4.3 10.0% 14.3 9.0% 48 118.5CONGO, DEM REP $ 150 $ 11.6 6.0% 64.2 19.0% 46 2 344.9ZIMBABWE 12.5 44 390.8AVERAGE SADC $ 3 060 $ 33 5% 17.5 12% 52 657.5 TOTAL SADC $ 451.1 260.3 9 280.3EURO AREA $ 38 821 $ 13 565.5 1.0% 325.9 3.0% 80 2 585.2

Source: World Bank, World Development Indicators 2008



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.



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 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.



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.fischer-

tropsch.org/primary_documents/presentations/acs2001_chicago/chic_slide01.htm

♦ Sasol 2011 Annual Report



APPENDIX 1

Typical Refinery Operation

[Source: BPSA]

The Sasol synfuel plants at Secunda in Mpumalanga operate the world’s only commercial coal-

based 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.

CrudeOil

Other Feeds

Losses Fixed Costs-$

LPGPetrolNaphtha

KeroseneDiesel/Gas Oil

LubesWaxesBitumenHeavy Fuel Oil/MFO

Products+$

Fuel Gas and Oil

EnergyIncreasingBoiling Pt &Molecular wt

CrudeOil

Other Feeds

Losses Fixed Costs-$

LPGPetrolNaphtha

KeroseneDiesel/Gas Oil

LubesWaxesBitumenHeavy Fuel Oil/MFO

Products+$

Fuel Gas and Oil

EnergyIncreasingBoiling Pt &Molecular wt

what is a refinery?



Coal to Liquid Fuels Synthetic Refining Process

Coal to Liquids Refining

CoalGasification

GasClean-up

HTFTSyntholProcess

ConventionalRefining:Cat ReformingCat PolyHydrogenation

SynCrude

Gas feedstock for Petrochemicals

LPG

Petrol

Oxygen

Steam

CoalClean GasGas

Jet / Paraffin

Diesel

Fuel Oil

Alcohols

[Source: IPSR]

Natural Gas to Liquid Fuels Synthetic Refining Process

Gas to Liquids Refining

GasReforming

HTFTSyntholProcess

ConventionalRefining:Cat ReformingCODAlkylationIsomerisationHydrogenation

Clean Gas

SynCrude

Gas feedstock for Petrochemicals

NaturalGas

Oxygen

Steam

LPG

Petrol

Jet / Paraffin

Diesel

Fuel Oil

Alcohols

[Source: IPSR]



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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

2162

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

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 Email Appointed

Ms Chrissie Froneman Franchise & Marketing Manager

Ms Kathleen Marais Executive Director [email protected]

Mr Gary Victor Marais Managing Director

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



CHEVRON SOUTH AFRICA (PTY) LTD

Trading As: Caltex

Reg. Number: 1911/001154/07

VAT Number: 4460101563 Updated: 2012-02-09


PO Box 714, Cape Town

8000

Chevron House, 19 DF Malan Street

Foreshore, Cape Town, 8001

Tel: +27 21 403 7911 Fax.: +27 21 403 0550

Email: [email protected] Website: www.chevron.com

Shareholders


Chevron Corporation USA via Chevron Global Energy Inc 75.00

BEE Consortium 23.00

Employee Trust 2.00

Management


Mr B Forbes Director

Ms Yoliswa Pumla Balfour Non-Executive Director 2003-03-10

Ms Teresa Booth-Oliveira Commercial Manager

Ms Colleen Carr Human Resources Manager

Mr Martin Nigel Andrew

Donohue Chief Executive Officer 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 Non-Executive Director 2003-03-10

Mr Mpho Innocent Scott Non-Executive Director 2003-03-10

Mr James Kiki Seutloadi Executive Chairman

Mr Trevor John Stallbom Executive Director 2010-07-01

Mr Arthur Peter Wilson Financial Director



History of Business

Chevron South Africa (Pty) Ltd was established in May 1911 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 has 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

Stake

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

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


Distribution Rights


Subsidiaries, Associates & Investments

Name Percentage

Coal Resources (Pty) Ltd 100.00



DEOJAY PETROLEUM KZN (PTY) LTD

Reg. Number: 2004/007140/07


BEE Rating: Level 2 Emex Updated: 2012-02-06


PO Box 201654, Durban North

4016

Unit 3A, Rinaldo Industrial Park

50 Moreland Drive, Durban North, 4051

Tel: +27 31 569 1276 Fax.: +27 31 569 1277

Email: [email protected] Website: www.deojay-petroleum.co.za

Shareholders


Deojay Holdings (Pty) Ltd 100.00

Management


Mr Jacobus (Jackie) Frederick

le Roux Managing Director [email protected] 2004-03-16

Ms Nisha Reddy Financial Manager

Mr Colin Wright Technical & Sales Manager

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


Auditors Grant Thornton

Brandnames

Deojay



ENGEN PETROLEUM LTD

Reg. Number: 1989/003754/06


BEE Rating: Level 3 AQRate Updated: 2012-02-09


PO Box 35, Cape Town

7525

Engen Court, Thibault Square, Cnr Riebeeck &

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 Tel

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

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


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



Management


Mr Mogamat Adnan

Adams

General Manager: Enterprise Risk &

Assurance 2007-12-01

Mr Kamal Bahrin Bin

Ahmad General Manager: Refinery 2011-01-14

Mr Andrew Muir Bryce General Manager: Financial Services 2006-12-01

Mr Lungile Adonijah

Dumse General Manager: Human Capital 2004-12-01

Mr Wayne Patrick

Hartmann

General Manager: International

Business Development 2001-09-09

Ms Tania Landsberg Group Communications Manager tania.lansberg@

engenoil.com

Mr Nkosinathi (Natie)

Martin Maphanga General Manager: Corporate Affairs 2008-04-01

Ms Bulelwa Payi Executive: Communications

Dr Thangaratnam (Bea)

Ponnudurai General Manager: HSEQ 2008-04-01

Ms Ivershini Reddy General Manager: Supply, Trading &

Optimisation 2007-10-01

Mr Nizam Salleh Chief Executive Officer & Managing

Director

Ms Vuyelwa Sono Executive: BEE & Government

Relations

vuyelwa.sono@

engenoil.com

Mr Stephen (Steve) Paul

Williams General Manager: Lubricants 2009-01-01

Mr David (Dave) William

Wright

General Manager: Corporate

Planning 2006-03-24

Mr Vukile Vezithemba

Zondani

General Manager: Engen Sales &

Marketing 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 1990, the name was changed to Engen Petroleum Ltd. In

1993, Trek Petroleum, Sonap and Mobil were consolidated into the company. In February 2007, the

assets and operations of Zenex Oil (Pty) Ltd were acquired and incorporated.



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


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 of

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



FUCHS LUBRICANTS (SOUTH AFRICA) (PTY) LTD

Reg. Number: 1979/003105/07


BEE Rating: Level 8 BEE Rating Solutions Updated: 0000-00-00


07 Diesel Road, Isando

Gauteng,1609

PO Box, Isando

Kempton Park, Johannesburg, 1600

Tel: +27 11 565 9600 Fax.: +27 11 392 5686

Email: Website: www.fuchsoil.co.za

Branches


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


Mr Stefan Fuchs Chairman

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 merged 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.



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 and Fincham Industrial Supplies.

Nr. of Employees 117


Auditors KPMG Inc



GERM AFRICA (PTY) LTD

Reg. Number: 1938/011133/07


BEE Rating: Level 4 Updated: 2012-02-21


PO BOX 2, Linmeyer

2105

3 Sandown Valley Crescent, Benmore

Gauteng, 2010

Tel: +27 11 435 0348 Fax.: +27 11 435 4059

Email: Website: www.germafrica.co.za

Branches


Durban Branch Kwazulu- Natal

Management


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


Auditors Horwath Leverton Boner

Distribution Rights



Name Percentage

Filterwell Industrials (Pty) Ltd 100.00



H AND R SOUTH AFRICA (PTY) LTD

Reg. Number: 2004/004800/07



PO Box 21575, Bluff

4036

113 Trinidad Road, Island View

Bluff, 4052

Tel: +27 31 466 8700 Fax.: +27 31 466 8716

Email: [email protected] Website: www.hur.com

Shareholders


H & R Wasag AG 100.00

Management


Mr Neils Heinz Hansen Group Chief Executive Officer 2004-07-01

Mr Deyar Natha Non-Executive Director 2006-07-01

Mr Stephan James Parkinson Non-Executive Director 2007-07-02

Mr Rudi van Niekerk Sales & Marketing Manager rudi.vanniekerk@

hur.com

Mr Clive Richard Wood Regional Chief Executive

Officer [email protected] 2009-01-28

History of Business

H and R Global Special Products (Pty) Ltd was established in June 2004, 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



Nr. of Employees 36

Banks 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



INDY OIL SA (PTY) LTD

Reg. Number: 1999/016319/07


BEE Rating: Level 8 Empowerdex Updated: 2012-02-03


P O Box 620, Milnerton

7435

4 Platinum Road, Milnerton

7441

Tel: +27 21 552 2330 Fax.: +27 21 552 2879

Email: [email protected] Website: www.indyoil.co.za

Branches


Indy Oil Durban KwaZulu-Natal Ian Cooney +27 31 944 1923

Indy Oil Johannesburg Gauteng Adam Williamson +27 11 392 3111

Shareholders


The Scarborough Family Trust 100.00

Management


Mr Ian Cooney Branch Manager - Durban

Mr Robbie Diamond Sales Manager

Mr Howard Edwards Financial Manager [email protected]

Ms Jacqueline Yvonne

Pothecary Executive Director

Mr Trevor Hayward Pothecary Executive Director

Mr Adam Williamson Branch Manager:

Johannesburg

History of Business

Indy Oil SA (Pty) Ltd was started in September 1999 utilising a shelf entity named 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 manufacture 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


Auditors RA Frith

Brandnames

Indy Oil

Trademarks

Indy Oil



KZN OILS (PTY) LTD

Reg. Number: 2001/021458/07



PO Box 74134, Rochdale Park

4034

397 North Coast Road, Briardene

4051

Tel: +27 31 570 0550 Fax.: +27 31 570 0522

Email: [email protected] Website: www.kznoils.co.za

Branches


KZN Oils - Brakpan Gauteng +27 11 8131502

KZN Oils - Briardene Warehouse KwaZulu-Natal +27 31 5700533

Shareholders


Mr R Reddy 74.00

Phaphama 26.00

Management


Mr Jack (Sundro) Moodley Financial Manager [email protected]

Mr Shaun Naidoo National Sales Manager

Ms Viveena Naidu Human Resources Manager

Mr Suren Padayachee Call Centre Manager

Mr Rajendran (Rajen) Reddy Chief Executive Officer [email protected] 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 84

Empowerment

Stake 100%




Auditors Deloitte & Touche

Brandnames

KZN Oils


Name Percentage

KZN Bunkers (Pty) Ltd 100.00



LUBRITENE (PTY) LTD

Reg. Number: 1996/001997/07



Private bag X97, Halfway House

1685

Gleneagles, Fairway Office Park

52 Grosvenor Road, Bryanston, 2021

Tel: +27 11 976 2944 Fax.: +27 11 393 1707

Email: [email protected] Website: www.lubritene.co.za

Branches


Lubritene Zambia +09 2602 311032

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

Management


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 Director 2010-11-01

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.




Auditors Colin Smith and Company



NATIONAL PETROLEUM REFINERS OF SOUTH AFRICA (PTY) LTD

Trading As: NATREF

Reg. Number: 1967/012994/07


BEE Rating: Not Finalised Updated: 2012-01-30


PO Box 234, Sasolburg

1947

Admin Building, Block B, Jan Haak Road

Industrial Sites, Sasolburg, 1947

Tel: +27 16 940 9111 Fax.: +27 16 940 2503

Email: Website: www.sasol.com

Shareholders


Sasol Oil (Pty) Ltd (Held by Sasol Ltd - 75%) 63.64

TOTAL South Africa (Pty) Ltd 36.36

Management


Mr Line Bobillo Director 2010-11-05

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 Human Resources Manager

Mr Pierre Noailly Manufacturing Director

Mr Maurice Radebe Director 2007-01-01

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

History of Business

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



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.


Secretary Sasol Group Services (Pty) Ltd

Banks ABSA Bank Ltd

Auditors KPMG Inc

Production Capacity



Name Percentage

Nexsum Leasing (Pty) Ltd 100.00

Twente Woonstelle (Pty) Ltd 100.00



PETROLEUM MARKETING ORGANIZATION (PTY) LTD

Trading As: PETROMARK

Reg. Number: 1972/004220/07


BEE Rating: Level 7 BEE Professional Assignments Updated: 2012-02-15


PO Box 713, Edenvale

1610

2 Foreman Road, Spartan Ext 3

Kempton Park, 1619

Tel: +27 11 392 8740 Fax.: +27 86 688 6601

Email: [email protected] Website: www.petromark.co.za

Branches


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

Shareholders


The Seahound Trust 56.00

Directors 44.00

Management


Ms Tinky Moolman Financial Manager tinky@

petramark.co.za

Mr Alan Taten Robertson Managing Director 2000-09-01

Mrs Carol Angela Robertson Non-Executive Director 2003-10-01

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 manufactures 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


Auditors Johan Zwarts & Associates



Brokers van Flymen & Associates

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



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

THE

Trading As: PETROSA

Reg. Number: 1970/008130/07




Private Bag X5, Parow

7499

151 Frans Conradie Drive, Parow

Cape Town, 7500

Tel: +27 21 929 3000 Fax.: +27 21 929 3144

Email: [email protected] Website: www.petrosa.co.za

Branches


PetroSA Europe BV Rotterdam Netherlands Mr Sastri Gounden +27 31(0) 10 400 7353

Shareholders


Department of Minerals & Energy via CEF (Pty) Ltd 100.00

Management


Mr Mputumi Damane Non- Executive Director

Ms Nonhlanhla Jiyane Non- Executive Director 2011-03-01

Mr Mohamed Kajee Chairman & Non-Executive

Director 2007-07-01

Ms Esther Latelape Non- Executive Director 2011-03-01

Ms Linda Makatini Non- Executive Director 2010-01-01

Mr Zingisa Mavuso Alternate Non-Executive

Director 2009-04-09

Ms Nondumiso Medupe Non- Executive Director 2010-01-01

Dr Benny Mokaba Non- Executive Director 2011-03-01

Mr Andrew (Connie) Molusi Non- Executive Director 2011-03-01

Mr Nkosemntu Gladman

Nika Chief Financial Officer 2003-02-09

Ms Nosizwe Nokwe President & CEO

Dr Zavareh Rustomjee Non- Executive Director 2009-02-09

Mr Yekani Tenza Non-Executive Director 1999-01-12



Mr Hilton Trollip Non- Executive Director

Mr Dalikhaya (Rain) Zihlangu Non-Executive Director 2006-01-12

Mr Musa Zwane Non- Executive Director 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 January 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 of fuel per day.

Major clients include Caltex, Engen, Sasol,Shell, International Tullow, Chinese national oil

companies.

Nr. of Employees 1 836

Empowerment

Stake 100%

Secretary Adv Sindiso Ngaba


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 competitive 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.



Prevailing Conditions in the Industry

Volatile commodity prices as well as exchange rates. Increased resource nationalisation. Low

margins especially downstream.

Production Capacity



Name Percentage

Brass Exploration Unlimited (Nigeria) 100.00

GTL.F1 AG (Switzerland) 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



PISTON POWER CHEMICALS CC

Reg. Number: 1998/050507/23


BEE Rating: Level 1 Updated: 2012-02-17


PO Box 90, Desainagar

4405

316 Balfour Road, Jacobs

4052

Tel: +27 31 468 6825 Fax.: +27 31 468 6826

Email:

[email protected];

[email protected];

[email protected]

Website: www.pistonpower.co.za

Branches


Piston Power Chemicals Johannesburg +27 11 3971225

Piston Power Chemicals Cape Town +27 21 5518939

Shareholders


Members 100.00

Management


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 industrial

industries.

Nr. of Employees 18

Empowerment

Stake 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



SASOL WAX (DIVISION OF SASOL CHEMICAL INDUSTRIES LTD)

Reg. Number: 1968/013914/06




PO Box 1, Sasolburg

1947

Carl Bosch Road, Chem City 2

Sasolburg, 1947

Tel: +27 16 960 2342 Fax.: +27 16 960 2310

Email: [email protected] Website: www.sasolwax.com

Branches


Sasol Wax - Durban Manufacturing Plant KwaZulu-Natal

Sasol Wax - Sasolburg Manufacturing Plant Free State

Shareholders


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

Development Corporation of South Africa Ltd - 7.9%) 100.00

Management


Mr Jacobus Francois Conradie Director 2007-11-07

Mr André Marinus de Ruyter Executive Chairman 2010-02-04

Mr Johan du Preez Divisional Managing

Director

Ms Michelle du Toit Director 2007-11-13

Ms Gerda Freitag Financial Manager:

Accounting [email protected]

Mr Nicolas (Nico) Jacobus

Janse van Rensburg Financial Manager

nico.jansevanrensburg@

sasol.com 2009-05-27

Ms Kandimathie Christine

Ramon Director 2009-07-13

Ms Carine van den Berg 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.



Nature of Business

Sasol Wax is involved in the manufacture of wax and paraffin, which is retailed to local candle

manufacturers and also exports wax to overseas clients who manufacture inks, adhesives and

paraffin.


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 of international trade.

Brandnames

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



SHELL & BP SOUTH AFRICAN PETROLEUM REFINERIES (PTY) LTD

Trading As: SAPREF

Reg. Number: 1960/000007/07




PO Box 3179, Durban

4000

Refinery Road, Prospecton

4110

Tel: +27 31 480 1911 Fax.: +27 31 468 1913

Email: [email protected] Website: www.sapref.com

Shareholders


BP Southern Africa (Pty) Ltd (Held by BP Plc - 75%; Mineworkers Investment

Company (Pty) Ltd - 17.5%; Womens Development Bank - 7.5%) 50.00

Shell South Africa Holdings (Pty) Ltd 50.00

Management


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 Non-Executive Director 2009-11-03

Mr Robin Mooldijk Manageing Director

Mr Pravin Motilal Lead Engineer Projects /

Development

Mr Colin Muthusami Financial Manager and Company

Secretary

Mr Abhay Raichoora Director

Ms Lori Ryerkerk Director



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 1960 and underwent a

name change to Shell & BP South African Petroleum Refineries (Pty) Ltd in May 1962. 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 180 000 barrels of fuel per day. Oil, brought from 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.


Empowerment

Stake 25%


Auditors PricewaterhouseCoopers Inc

Production Capacity


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 from 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.



SPANJAARD LTD

Reg. Number: 1960/004393/06

JSE Code: SPA


BEE Rating: Level 7 BEE Verification Agency Updated: 2012-02-03


PO Box 7294, Johannesburg

2000

748-750 Fifth Street, Wynberg

2090

Tel: +27 11 386 7100 Fax.: +27 11 786 5685

Email: [email protected];

[email protected] 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

Shareholders


Spanjaard Group Ltd 55.30

Ms E Nepgen 8.70

Mr RJW Spanjaard 8.40

Management


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 Independent Non-Executive

Director 2011-11-01

Mr Bernard Law Montgomery Independent Non-Executive

Director 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

Mr Robert Johannes Willem

Spanjaard Executive Chairman 1960-12-02



Dr Daniel Petrus

van der Nest

Lead Independent Non-Executive

Director 2006-11-01

Mr Hendrik Jacobus

van Heerden Executive Financial Director 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 markets. Contract packaging

of the company's range of lubricants is done for private labels. The company also specialises in

aerosol food and aerosol cosmetic products. Metal powder products are also manufactured through

two of its subsidiaries.


Secretary Mrs Margaret Bond


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 Tel

Computershare Investor Services

(Pty) Ltd

70 Marshall Street,

Johannesburg, 2001

PO Box 61051,

Marshalltown

Brandnames

Coppermet, Molyslip, Spanjaard

Trademarks

Molyslip, Spanjaard

Distribution Rights

Molyslip, Spanjaard




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



TOTAL SOUTH AFRICA (PTY) LTD

Reg. Number: 1954/003325/07



PO Box 579, Saxonwold

2196

Total House, 3 Biermann Avenue

Rosebank, 2146

Tel: +27 11 778 2000 Fax.: +27 11 778 2001

Email: Website: www.total.co.za

Shareholders


Total Overseas Holding (Pty) Ltd 50.10

Main Street 87 (Pty) Ltd 25.00

Industrial Partnership Investments Ltd 24.90

Management


Mr Line Bobillo Director 2008-09-18

Mr Alain Georges Jean

Champeayx Business Executive 2002-03-08

Mr Leon Crouse Director 2008-09-18

Mr Edwin de la Harpe Hertzog Director 1990-06-01

Mr Olivier Alain Devouassoux Director 2008-03-26

Ms Gugu Yvonne Yolande

Ditodi 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

History of Business

Total South Africa (Pty) Ltd was established in December 1954. In October 2000, 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.



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.


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 commercial and agricultural industries.



VALVOLINE SOUTH AFRICA (PTY) LTD

Reg. Number: 1995/008199/07


BEE Rating: Not Rated Updated: 2012-02-03


PO Box 314, Bruma

2026

First Floor-Lakeside 2, Ernest Oppenheimer

Avenue, Bruma, 2198

Tel: +27 11 616 2200 Fax.: +27 11 616 4982

Email: Website: www.valvolineeurope.com

Shareholders


Ashland Inc 100.00

Management


Mr Patrick George Thomas

Bergman Managing Director

pgtbergman@

ashland.com

Mr Craig Moughler Non-Executive Director

History of Business

Valvoline South Africa (Pty) Ltd was registered in 1995.

Nature of Business

Valvoline South Africa (Pty) Ltd is a manufacturer of high performance automotive, commercial and

industrial lubricants and aftercare products.

Nr. of Employees 15

Banks Citibank N.A.

Auditors Ernst & Young Inc

Brandnames

Dura-Blend, Max Life, Syn Power, Valvoline

Trademarks

Dura-Blend, Max Life, Syn Power, Valvoline

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