PetroSA’s debt levels to rise as it seeks to fund capex plan, downstream entry
South Africa’s national oil company, PetroSA, has indicated that it is likely to take on significant levels of debt in the coming years to enable it to finance various capital programmes, as well as its proposed acquisition of downstream operations.
The State-owned group reported a drop in net profits from R1.2-billion in 2012 to R593-million this year, but stressed that its financial position remained robust, with total assets of R34.2-billion and a cash balance of R7.4-billion.
However, acting CFO Webster Fanadzo cautioned earlier this month that the company’s aggressive capital expansion pro- grammes, together with a proposed downstream acquisition, would result in “financial pressures” and an increase in loan financing.
PetroSA’s sole shareholder, the Central Energy Fund, confirmed recently that a downstream entry was being prioritised, amid ongoing reports that PetroSA was in advanced negotiations with Petronas regarding the acquisition of the Malaysian oil group’s 80% interest in Engen.
However, PetroSA was also investing in projects to secure additional feedstock for its gas-to-liquids (GTL) refinery in Mossel Bay, with R3.7-billion spent in the 2013 financial year alone on Project Ikhwezi, an offshore gasfield development.
The company was also working on a lique- fied natural gas (LNG) import solution to bolster GTL security of supply over the longer term and planned to make a final investment decision on a $375-million to $510-million LNG import facility in the fourth quarter of 2014.
It was also participating in a study of a 300 000 bl/d Eastern Cape crude refinery project, dubbed Project Mthombo, which could involve an investment of between $9-billion and $11-billion.
CEO Nosizwe Nokwe said the group’s bottom line would diminish further in the short term as a result of higher expenditure on projects, but that she was confident that the investments would deliver sustainable returns over the longer term.
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