Cape Town - State-owned oil company PetroSA recorded a R356m net loss for the 2009/10 financial year compared to a R1.9bn net profit in the 2008/09 period.
"The net loss was mainly attributable to declining gas production, the reduced international oil prices and the statutory maintenance shutdown of PetroSA's Mossel Bay refinery during 2009," the company said in a statement on Tuesday.
The company said the global economic recession had triggered a slowdown in demand for diesel and petroleum products. Furthermore, the statutory shutdown saw PetroSA importing diesel and petrol, in order to meet industry supply commitments.
PetroSA said it experienced a 33% decrease in revenue to R8bn, from the previous year's R12bn.
No dividends were declared in the 2009/10 financial year.
"A major cost in the 2009/10 year included a R500m expenditure on exploration in Equatorial Guinea, which is yet to yield commercially exploitable hydrocarbons."
The company said significant progress had been achieved on various fronts, including work on Project Mthombo, where a feasibility study for the proposed 360 000 barrels per day refinery, was successfully completed.
In the year under review, the national oil company spent a R1.26bn on preferential black economic empowerment procurement, representing 48.8% of the total expenditure bill of R2.58bn.
"The liquid fuels charter requires a 25% BEE participation across the value chain."
PetroSA's acting CEO and president Dr Nompumelelo Siswana said the company was confident demand for diesel and petrol would soon return to an upward growth trend.
"The company-wide commitment for operational effectiveness will help PetroSA wade through the era the organisation has now entered. This is an era afflicting the industry at large, during which the cost of doing business is increasing as it becomes more costly to extract the additional barrel or cubic metre of hydrocarbons."
She said for PetroSA, the key cost remained refinery feedstock. The need to ensure the reduction of harmful emissions was also critical.
In the 2008/09 annual report PetroSA had announced plans focused on sustaining the Mossel Bay Gas-To-Liquids refinery that included a liquefied natural gas (LNG) import project.
"Over the period PetroSA was engaged in negotiations with potential LNG suppliers, but due to the high prices that rendered the option non-commercial, PetroSA earlier in the year put on hold efforts to import LNG, while alternative gas supplies are investigated."
The company said should conditions change and the price became reasonable, LNG would be re-evaluated.
For now PetroSA was focusing on exploiting indigenous gas resources to address feedstock problems at the Mossel Bay refinery.
A domestic offshore drilling campaign, Project Jabulani, to appraise discovered gas accumulations had resulted in a decision to commence with development studies on the F-O gas field.
The reserve recovery from the F-O gas field, situated 40km south-east of PetroSA's FA production platform, is estimated at 200 billion cubic feet.
"The F-O gas field offers an opportunity to extend the GTL refinery's productive life by up to eight years and production of the gas field is targeted for 2013."
PetroSA's chief financial officer Nkosemntu Nika said in the short-to-medium term, the sustainability of the Mossel Bay GTL refinery remained a major problem. He was however confident the company's financial performance would improve.
"The outlook for the new financial year remains positive despite the significant losses recorded in the year under review."
He said the corporate balance sheet remained strong but required improvement by acquiring assets for further diversification of income streams.