August 1, 2011
The Customer Driven Retailer
Grounded in Insights, Fueled by Data and Analytics
CEO – Ebrahim Takolia February 2014
Assessment of the Upstream Sector in the Oil and Gas Industry
1. What has been the experience of the oil and gas industry?
2. SAOGA’s strategy on localisation, BBBEE and skills development?
3. How does SAOGA see the future of the oil and gas industry?
August 1, 2011
The Customer Driven Retailer
Grounded in Insights, Fueled by Data and Analytics
CEO – Ebrahim Takolia February 2014
Serving the interests of industry and members in the upstream and midstream oil & gas sectors
Membership | Advocacy | Knowledge | Linking & Networking
History
A non-profit organisation that acts in
the interests of industry and
members in the Upstream and
Midstream sectors of the Oil & Gas
value chains
Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance 3
http://www.saoga.org.za/about-us/overview-saoga
We now have a national
and regional strategy
focused on the
development of the oil
& gas industry!
Governance and Implementation
Board of Directors
CEO
Employees
Ports Cluster
Leadership Team
Governance Task
Team
Major Project
Leadership Team
Marketing
Leadership Team
EXCO
Mission
Vision
Strategy
ARC HRC
Implementation
Setting and
Implementing
Reviewing,
Advising and
Approving
We implement on our mandate
through project leadership teams
Local Content
Task Team
Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance 4
Did South Africa have an upstream and midstream Oil & Gas sector?
Not really
Oil & Gas in South Africa – The Past
Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance 6
Upstream • Industry was primarily based on
passing trade
• Focused on rig and ship repair
• PetroSA – Mossgas and work
related to this project
Midstream • Activity limited to PetroSA for new
work
• Maintenance of Refineries
Industry & SAOGA – Past Focus Areas
Since the formation of SAOGA, the organisation has achieved the following:
• The proactive networking and linking of Oil & Gas professionals and the industry in Sub-Saharan Africa
• Raised the profile for Oil & Gas in South Africa and Sub-Saharan Africa for more than ten years
• Marketing of South Africa's Oil & Gas sector potential and the capabilities of the local industry at global
conferences and exhibitions
• Advanced the interests of the industry and members through lobbying and advocacy
• Promoted the development of a robust ship / rig repair industry and associated port infrastructure
• Advanced the interests of the ship / rig repair industry by co-ordinating industry efforts
• Worked with relevant stakeholders to gear up South African ports to service the oil and gas industry
• Cape Town - A Berth, Berth 502, the repair Quay and Sturrock Dry Dock
• Saldanha Bay – Quay 204
• Linked the private and public sector by working with both governments and industry to develop and
create a sustainable oil and gas industry
• In South Africa, Oil & Gas is now part of the Industrial Policy Action Plan as a result of work undertaken by
SAOGA
• Awareness of the Oil & Gas industry and its potential for development in Sub-Saharan African countries
• Providing comment on legislation that will facilitate the development of a robust Oil & Gas industry
• Assessment and changes to legislation affecting business issues
• Value Added Taxation and Customs (Goods imported or cleared from a customs and excise warehouse for
the exploration for petroleum or production of petroleum)
• Taxation
• Visa Issues
7 Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
Industry & SAOGA – Future Focus Areas
Based on the recent developments in the Oil & Gas sector in Africa, the organisation has geared
itself up to meet the requirements of the significantly expanding industry in Sub-Saharan Africa:
• To continue to proactively networking and link Oil & Gas professionals and the industry in Sub-Saharan
Africa
• To continue to raise the profile for Oil & Gas in South Africa and Sub-Saharan Africa
• Marketing of South Africa's and Sub-Saharan Africa's Oil & Gas sector potential and the capabilities of the
local industry at global conferences and exhibitions
• Advance the interests of the industry and members through lobbying and advocacy
• Promote the development of a robust ship / rig repair industry and associated port infrastructure • Advanced the interests of the ship / rig repair industry by co-ordinating industry efforts
• Establish a closer relationship with relevant port authorities
• Link the private and public sector by working with both governments and industry to develop and create a
sustainable oil and gas industry • In South Africa, update the Oil & Gas section of the Industrial Policy Action Plan
• Develop a Research Agenda for work that needs to be undertaken in the Oil & Gas sector relevant to the
governments, industry and members
• Continue to raise awareness of the Oil & Gas industry and its potential for development in Sub-Saharan African
countries
• Comment on legislation that will facilitate the development of a robust Oil & Gas industry
• Assessment and comment on legislation affecting business issues • Value Added Taxation and Customs (Schedule 4 of the Customs Act specific to the Oil & Gas industry -
exemption from VAT and Security)
• Corporate Taxation
• Visa Issues
• Developing a regional market for gas 8 Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
Industry & SAOGA – Future Focus Areas
Based on the recent developments in the Oil & Gas sector in Africa, the organisation has geared
itself up to meet the requirements of the significantly expanding industry in Sub-Saharan Africa:
• Advance the development of the local industry:
• Local content
• Broad Base Black Economic Empowerment
• Skills development
9 Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
SAOGA’s strategy on localisation, BBBEE and skills development
Practical and achievable recognising the constraints related to funding, capacity and skills
Lets look at the Oil & Gas Value Chain
11 Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
Aspect
Localisation
BBBEE
Skills Development
Limited Potential Medium Potential High Potential
Offshore Exploration
requires >R20 billion
Shale Gas Exploration
requires >R10 billion Refinery and Primary
Distribution
R10 – >R100 billion
Refinery and Primary
Distribution
R10 – R30 billion
Cash Flow High Risk – No Certainty Medium Risk due to high capital
outlays and environmental issues
Cash flows can be monetized with
offtake agreements
KEY
RISK
Localisation, BBBEE & skills development
12 Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
Technology R&D
Procurement
Local manufacture / supply The Midstream and Downstream natural gas value chains
represent significant opportunities for :
Local manufacture /supply:
The manufacture / supply of products and services
Procurement:
Importation and local assembly of goods under license from
established manufacturers
Technology R&D:
Technology R&D to develop competitive advantage
Full importation of equipment
A lack of skills / knowledge that prevents local procurement
Skills development
Skills development and transfer
Full importation
Skills development
SAOGA’s Focus – Supplier Development
13 Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
What does SAOGA already do?
Membership | Advocacy | Knowledge | Linking & Networking
SAOGA’s Focus – Supplier Development
14 Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
What will SAOGA do for supplier development?
• Local Content Task Team
• SAOGA is setting up this forum for Oil & Gas
• Act as a forum to co-ordinate various activities from industry players
• DTI
• UNIDO
• Provincial Economic Development Departments
• Industry players in Oil & Gas
• Work with the forum to identify areas of high potential for local
economic development
• SAOGA Oil & Gas Academy
• Link various players and activities in the Oil & Gas
value chain
• Collaborate with international bodies on skills
development and capacity building
Looking to the Future of Oil & Gas
West, now East and South Africa?
Oil & Gas Developments in South Africa
• 20 Companies
• 30 Licences
• Offshore exploration activity announcements
Source: PASA
• Exceptional
amount of activity
and a healthy
spread of operators
• Total 73 TCP and
ER issued
South Africa Onshore
• Shale Gas
• Coal Bed Methane
Oil & Gas Developments in South Africa
Source: PASA
Oil & Gas Developments in Africa A
fric
a O
il &
Gas R
eserv
es
Source: ey.com
1980
2010
OIL
1980
GAS
18 Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
Oil & Gas Developments in Africa
19
Sub-Saharan Africa – Natural Gas Reserves
Sub-Saharan Africa
map depicting the
relative size of
Africa
~27 million square
kilometres
Sub-
Saharan
Africa
Sub-Saharan Africa currently accounts for a relatively small percentage of world
production and reserves for oil and gas. As at January 2014, Sub-Saharan Africa's
share of world oil production and oil reserves was 6.52% and 4.26% respectively, and
the share of gas production and reserves was 3.19% and 3.28% respectively.
However, these production and reserve numbers are expected to grow significantly as
the vast continent remains one of the last exploration frontiers for oil and gas, as
evidenced by the exploration activity by upstream exploration companies and
significant oil and gas discoveries in the region.
Production /
Reserves
Share of
World
Oil Production (barrel per day) 5 709 471 6.52%
Proven Oil Reserves
(million barrels) 63 118 4.26%
Gas Production
(cubic metres per year) 107 024 000 000 3.19%
Proven Gas Reserves
(cubic metres) 6 143 337 168 800 3.28%
Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
Sector Overview – SSA Major Projects
• Refineries
• Clean fuel technology upgrades of crude & GTL
refineries
• Mthombo Refinery, port of COEGA - (Feasibility
Studies being conducted for crude oil refinery
and import terminal)?
• Terminals
• Oil – Oiltanking MOGS Saldanha Crude storage &
blending terminal
• Oil/Gas – New Fuels/LPG Terminal in Richard’s
Bay – Vopak
• Gas – LNG Import Terminal to feed PetroSA
• LPG Import Terminal – Sunrise Energy
• Fuel Depot – Port of Nqura
• LNG Liquefaction – Palma Bay, Mozambique
20 Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
Sector Overview – SA Major Projects
Activity Year 14 15 16 17 18 19 20 21 22 23
SA Offshore
SA Onshore
Africa Onshore & Offshore
Refineries
Terminals
Mozambique – Palma Bay, LNG
Planning | Local Participation | Infrastructure | Skills
21 Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
Sector Overview – Industry Spinoffs
• Many large corporations have set
up or are considering setting up
offices in South Africa
• Foreign direct investments have
been made into South Africa with
the acquisition of local industry
players
• New companies have entered the
Oil & Gas value chain
Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
Future Scenarios
Africa Oil & Gas – current vs proposed future activity
Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
• Refineries: Sub-Saharan Africa is under-invested in refining capacity relative to the rest of the world.
• Offshore exploration: additional activity in East Africa.
• Local Africa demand: economic development in Africa will spur demand for natural gas.
23
Future Scenarios
Africa Oil & Gas – proposed future activity
24 Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance
Sub-Saharan Africa - the
next 20 years
Over the next 20 years
Sub-Saharan Africa will
see significant changes in
the upstream and
midstream sectors of the
oil and gas value chain.
Included in this section is
an examination of current
Oil & Gas activity and an
assessment of proposed
future Oil & Gas activity
over the next 20 years.
24
Connect with us! www.saoga.org.za
25
DISCLAIMER
Ebrahim Takolia, CEO © 2014 South African Oil & Gas Alliance 26
Disclaimer
The material in this presentation has been prepared by The South African Oil & Gas Alliance (SAOGA) and is based on information
available at the date of this presentation.
This information is given in summary form and does not purport to be complete. Information in this presentation, including forecast
information, should not be considered as advice or a recommendation.
Before acting on any information you should consider the appropriateness of the and the risk of adverse or unanticipated market,
financial or political developments.
This presentation may contain forward looking statements including statements regarding our intent, belief or current expectations
with respect to oil and gas industry businesses and operations, market conditions, results of operation and financial condition,
capital adequacy, specific provisions and risk management practices.
Readers are cautioned not to place undue reliance on these forward looking statements. SAOGA does not undertake any
obligation to publicly release the result of any revisions to these forward looking statements to reflect events or circumstances after
the date hereof to reflect the occurrence of unanticipated events.
While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative
manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside SAOGA’s control.
Past performance is not a reliable indication of future performance.
Ebrahim Takolia
Chief Executive Officer
Studio 604 | 6th Floor | 4 Loop Street | Cape Town 8001
T +27 21 425 8840 | C +27 82 304 3133 | F +27 86 218 0845
[email protected] | www.saoga.org.za