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PetroSA Full-Year Profit Expands 72% on Cost Cuts, Weaker Rand

Oct. 17 (Bloomberg) -- PetroSA Ltd., South Africa’s state oil and gas company, said full-year profit rose 72 percent as it cut costs and the rand fell, raising local-currency earnings.

Net income grew to 1.37 billion rand ($157 million) in the year ended in March from 799 million rand, and sales gained 37 percent to 14.4 billion rand, it said today in a statement.

“We continue with our cost containment,” Chief Financial Officer Nkosemntu Nika said. “A feature of the balance sheet is that it’s debt-free, providing us with a base to grow.”

PetroSA operates a gas-to-liquid refinery at Mossel Bay about 390 kilometers (242 miles) east of Cape Town that’s able to produce the equivalent of about 45,000 barrels of oil a day. Offshore gas fields supplying the plant with feedstock are depleting and the company is developing its five-well Ikhwezi project with the aim of sustaining production until 2020.

Drilling is due to begin by the year-end and the first gas output should start in the second half of 2013, Chief Executive Officer Nosizwe Nokwe-Macamo told lawmakers today. “The focus we have is on sustaining our gas-to-liquid plant,” she said.

Founded in 2002, Cape Town-based PetroSA produces about 5 percent of South Africa’s fuel and has stakes in oil and gas fields in Ghana and Equatorial Guinea. The company and China Petroleum & Chemical Corp. agreed to study building South Africa’s biggest oil refinery near the southern town of Port Elizabeth. The Mthombo plant will cost an estimated $10 billion.

PetroSA will need support for the project as South Africa faces “a real risk” of fuel supply shortages in the short- to medium-term, the company said in a presentation to lawmakers.

To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net.

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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