Transformation in the Petroleum Industry

1
Transformation in the Petroleum Industry The
Journey

• Presentation to the Parliamentary Portfolio
  Committee for
• Minerals and Energy
• 10 MAY 2007
• Prepared by
• SAPIA

2
Objectives of the Session

• Update Portfolio Committee on achievements by
  Petroleum Industry on Transformation
• Liquid Fuels Charter used for the self evaluation
• Evaluation done at Industry Level
• Identify Gaps and Way Forward

3
The aim of the Liquid Fuels Charter is to ensure
that there is sustainable presence, ownership and
control by Historically Disadvantaged South
Africans of approximately 25 in all facets of
the Liquid Fuels Industry by 2010
LFC scorecard
Regulatory objective
Ownership
Effective ownership of Enterprises by Black
people Encourages the sharing of equity and
voting rights with black people and black women
Direct empowerment
Management Control
Effective control of Enterprises by Black people
Encourages senior black decision making at
Executive Board and Senior Top management levels
Equity in the workplace Encourages companies to
identify and recruit black people at
professional, middle and lower management
positions
EmploymentEquity
Human Resource Development
Skills Development
Development of competencies of Black
employees Encourages companies to develop black
talent through spending on skills development,
overseas placement and learnerships
Procurement of Goods and Services from strong
B-BBEE recognition level suppliers Encourages to
procure from BEE compliant companies. Encourages
spend on Small and Micro-enterprises, gt50 Black
owned companies and gt30 Black Women owned
companies.
Preferential Procurement
EnterpriseDevelopment
Assist and accelerate the development and
sustainability of other enterprises Encourages
development or expansion of black small, medium
enterprises particularly along the value chain.
Indirect empowerment
Promote access to the economy for Black
people Encourages initiatives intended to
directly provide black people who are natural
persons with means of generating income for
themselves
Socio-Economic Development
4
Most of the Oil companies have signed equity
deals with Broad Based Economic Empowerment
groupings.
LFC scorecard
Ownership

• Ownership Target 25 by 2010
• Ownership deals signed by all Major Oil companies
• Average Industry ownership owned by BEE companies
  22
• Negotiations to extend ownership deals to 25
  ongoing
• All on-track to achieve minimum 25 ownership by
  BEE companies across the value chain

5
Significant Improvements have been achieved in
Management and Control

• Management and Control
• Target 25 by 2010
• Sapia Director - Black
• SAPIA Board of Governors are now 71 Black
• Black Representation in Oil Company Boards is
  appox 53
• Women representation in the Boards approx 20
• Executive Black representation in Oil Company
  Boards 40
• Executive Black Management representation 50

Management Control
6
Black representation in staff complement of Oil
companies has significantly improved

• Employment Equity 25 by 2010
• Black Staff complement in all Oil companies is
  approximately 63

EmploymentEquity
7
Industry needs to improve women representation at
all levels of the organization

• Employment Equity Woman
• Woman account for only 24 of staff complement,
  20 board representation

EmploymentEquity
8
Many interventions have been implemented and
developed to develop Staff within the Oil Industry

• Skills Development
• R70mil is spent by Industry on Black Skills
  Development
• Leadership in Oil and Energy Program with special
  focus on Woman(50 delegates)
• Learnerships Programs (1000 students in 2007)
• Artisan Training in SA - R145mil/annum
• Functional Training
• Business Management
• Supervisory Skills
• Loss prevention systems to improve safety

Skills Development
9
Local Preferential Procurement has exceeded the
Oil Industry Charter target of 25.

• BEE Procurement 25 by 2010
• Current Industry BEE procurement of goods and
  services Exceeds 50(approx R6.5 bil)
• EE Procurement Policy in place
• Monitor BEE spend on a monthly basis
• All suppliers evaluated using Industry standard
• Crude procurement from BEE companies is happening
  but current level are far from target this is
  receiving urgent attention
• SASDA created in order to improve supplier
  development within the Industry

Preferential Procurement
10
The creation of supplier Agency SASDA has not
delivered expected results

• Supplier Development
• Industry Committed to Supplier Development
• Industry spends approx R5mil a year on SASDA
• Staff has been seconded to SASDA from Oil
  companies
• SASDA developed Industry Database- some
  enhancements still need to be implemented
• Conflicting strategic direction between DME an
  Industry led to SASDA non delivery
• This needs to be resolved in order to ensure that
  suppliers are developed

Preferential Procurement
11
Several Emerging Black Small business companies
have received support from Oil Companies

• Enterprise Development
• Africa Oil, Investment, Infrastructure support,
• Masana Petroleum, infrastructure support,
  capacity building and business support
• Mzantsi Logistics, financial, capacity building
  and training
• Siyaka Trust
• Highveld Ridge Business Development
• Integrated Energy Centres, financial,business and
  training support
• Black representation in Retail Network
  approximately 40, programs in place to improve
  this

EnterpriseDevelopment
12
Our Corporate Social Investment aims at
sustainable development initiatives as envisaged
by the Liquid Fuels Charter

• Corporate Social Investment
• More than R100mil invested by Industry in 2007
• Education Especially Maths and Science
• Job creation
• Social development
• Health - AIDS
• Environment
• Road Safety program

Socio-Economic Development
13
In summary, our current assessment is that
Industry is on track towards achieving the Liquid
Fuels Charter 2010 aspirations

• WAY FORWARD
• Increase Black and women representation in senior
  and professional levels
• Direct skills spend to core and critical skills
  and women development
• Ensure that Black suppliers are developed
• Continue to increase the number of Black
  representation in Retail network