the petroleum oil and gas corporation of south africa (soc) ltd reg. no. 1970/008130/07 overview of...

The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07

Overview of the South African Gas Sectorand the role of PetroSA

Presented to the Parliamentary Portfolio Committee on Energy

09 September 2014


Our Key messages in relation to Gas Sector

• PetroSA is well positioned to be the gas aggregator and the agent of the State to take on the challenge of growing the gas sector in South Africa.

• We have accumulative experience in the gas industry across the entire value chain including access to proprietary GTL technology.

• Our projects are of national significance (beyond Mossel Bay) and are fully aligned to that of the National Development Plan (NDP).

1

2

3


CEF alignment

The CEF Group mandate is to invest in and develop gas and gas infrastructure in a manner which is commercial and can attract investment.

PetroSA is the implementing agent under CEF.

Integration of iGas into PetroSA will complement existing capabilities to be able to strenghten the value proposition of PetroSA in the gas sector

1

2

3


Our Mandate

Complement & promote Government policy Complement & promote Government policy & & strategic thruststrategic thrust

Advance energy goals and objectives as set out in Advance energy goals and objectives as set out in various various

policy instruments policy instruments , E.g. , E.g. Energy White Paper (1998), Energy Security Master Energy White Paper (1998), Energy Security Master Plan Plan

( 2007), Medium Term Strategic Framework (2009-2014), National Development ( 2007), Medium Term Strategic Framework (2009-2014), National Development PlanPlan

Operate as a commercial Operate as a commercial entity and create value for entity and create value for the shareholder the shareholder

• Pay tax and dividendsPay tax and dividends

Advance national objectives in the Advance national objectives in the petroleum industrypetroleum industry

•Spearhead industry transformationSpearhead industry transformation

4


PetroSA has been a pioneer in integrated GTL business and gas field developments in South

Africa

• Established in 2002, PetroSA owns one of the world’s largest GTL refinery.

• Multiple years of experience in developing and operating gas infrastructure.

• Business spans petroleum value chain

• Produces diesel, gasoline, kerosene and specialty products

• Has produced ~70 MMbbl crude oil & 1 Tcf of natural gas to date.

• Has upstream presence in South Africa, Equatorial Guinea and Ghana.

5

PetroSA owns proprietary GTL technology


South Coast Gas 2007

EM Field & Satellites2000

Project Ikhwezi(tight gas)

FA Satellites 1997

FA Field 1992

Historical Interventions to Sustain the GTL Refinery in the face of declining reserves

We have years of experience in developing and operating complex gas infrastructure.


The need for Gas in South Africa

7

South Africa:

•South African government recognizes the need for gas (NDP

2030/Draft IEP/IRP);

•Diversify current energy mix AND reduce carbon footprint.

Gas-to-Liquids (GTL):

•Declining feedstock;

•Sustain the Mossel Bay economy

•Growth opportunity to move into production of specialty chemicals;

and

•Establishes markets for upstream / shale gas.

Power:

•2013/14, Eskom spent R10.5-billion on diesel to operate its two

OCGT’s in the Western Cape.

•This was R8.1-billion above the R2.5-billion set aside by NerSA in its

price determination.

•Gas is a cleaner, ‘cheaper’ & more efficient source of energy;

•Western Cape imports ~2050MW to meet its daily demand.

Source: Department of Energy, 2013

Current Energy Mix:

•Gas currently accounts for only 2.8% in

terms of primary energy source!

•It is envisaged that 14% of electricity will

be generated from gas by 2030.


Current gas supply sources are limited and under-developed

Resource Reserves Markets Status/Future Projects

Block 9 (South Coast – RSA) ~0.4 Tcf Mossel Bay GTL Refinery • Current production• Project Ikhwezi• Additional prospects

Pande/Temane (Mozambique)

& Huge gas reserves >120tcf in Rovuma Basin, North of Mozambique

~3 Tcf Mozambique and Sasol’s Sasolburg and Secunda petrochemical plants, industrial customers and via Petronet pipeline to Kwazulu Natal

• Expansion of the current ROMPCO pipeline• Future expansion possible

Kudu (Namibia) ~0.8 Tcf Namibia and/or Western Cape

Namibia power stationExport to Western Cape

Ibhubhesi (West Coast – RSA)

~0.5 Tcf Western Cape Partnership: PetroSA (24%) & Sunbird Energy (76%)Production Right in place

Coal Bed Methane (CBM) To be proven Botswana/RSA power-generation

Too early in the development cycle

Shale Gas To be proven • RSA power-generation• GTL and other

Too early in the development cycle

LNG Worldwide supply • RSA power-generation• GTL and other

• Infrastructure to be developed• PetroSA LNG Project

8

Note: Only ‘reserves’ are quoted in this table. The table does not include prospective or contingent resources, either offshore or onshoreInvestment and appropriate work programs to re-risk prospective resources and mature contingent resources into reserves categories are required


Achieve energy security through becoming the

leading supplier of gas for the

benefit of RSA.

Achieve energy security through becoming the

leading supplier of gas for the

benefit of RSA.

Sustaining the GTL refinery through development of additional feedstock

Participate in the exploration and development of onshore gas (e.g. shale)

Continued offshore exploration andcommercialisation of offshore gas

Target discovered gas/acquire gasin neighbouring Mozambique/Tanzania

We are embarking on various initiatives to grow the role of Gas in the energy mix

11

22

33

44

55

Importation of LNG, and associated pipelines to increase the usage of natural gas in RSA, for both power generation, GTL and industrial customers


We are evaluating various security of supply options for South Africa

Shale Gas~390 Tcf?

East Africa Gas

West Africa & Rest of the World

LNGWestern Cape

•Atlantis/Cape Town OCGT •Saldanha Bay IDZ•Industrial Users

Eastern Cape

• Mthombo Refinery• Coega IDZ• East London IDZ

Mossel Bay

• GTL Refinery• Gourikwa OCGT

South Coast Gas/Oil

West Coast gas

• LNG importation project in progress

• Plans are afoot to convert power plants: OCGTs to CCGTs

• US IEA has estimated that SA may hold 390 Tcf of shale gas reserves

• Project Mthombo entails building a new crude refinery for SA

~150 TCF gas finds

10


PetroSA’s LNG importation project will unlock the growth potential for gas in South Africa

Proposed LNG terminal to comprise the following:

•Offshore Infrastructure (jetty, trestle, cryogenic pipelines)

•Onshore Infrastructure (storage tanks, re-gasification equipment, auxiliaries)

•Associative Pipeline Infrastructure

•Will create opportunities to supply Independent Power Producers (IPPs)

•Various locations are being evaluated.

11


We are actively positioning ourselves for Shale Gas development

12

Shale Gas acreage

• The company is actively positioning itself:

Established a dedicated Unconventionals Unit;

Contributing to the shaping of a suitable Regulatory Framework;

Developing in-house capabilities;

Pursuing strategic partnerships for research and technology development (incl. Tertiary Institutions, Service Oil Companies); and

Sustaining and growing gas infrastructure and markets.

• The current regulatory uncertainty has resulted in a delay in the development of unconventional resources.

We have past experience in shale gas drilling through Soekor!

The currently limited seismic and well data results in geological

uncertainty!


Amongst other initiatives, the NDP states…

Short term:

Develop offshore gas.

Do exploratory drilling for economically recoverable shale gas reserves.

Promote investment in LNG landing infrastructure.

Introduce cleaner fuels.

Medium term:

LNG infrastructure will be in place to power first CCGT’s.

Addressed by PetroSA plansAddressed by PetroSA plans

Our initiatives are in full support of the objectives of the DoE and the NDP

13


Required mechanisms to grow gas market

• Policy: An enabling Policy, Legislative and Regulatory Framework (certainty and clarity) e.g. MPRDA should empower PetroSA as the NOC , Gas Utilization

Master Plan ( GUMP -framework for the gas development) alignment with the Power Sector & PetroSA’s own plans

• Infrastructure: investment to unlock current constraints.

LNG diversifies supply and serves as a catalyst for indigenous gas development

Expand Gas pipelines to connect supply and demand

• Markets: Guaranteed and sustainable gas off-takers.

Erect Independent Power Producers (IPPs) in optimal locations

• Funding: Financial support for projects

14


Concluding Remarks

• Gas IS our business and gas is the future – it is imperative for SA to

grow its gas market, and PetroSA is well positioned to lead in this space

• PetroSA has accumulative experience in the gas industry across the

entire value chain including access to proprietary GTL technology

• PetroSA continues to cooperate with Eskom to provide a joint solution to

change the energy mix in the country.

• Shale gas is a game-changer for SA - PetroSA is the most capable agent

to supply the growing gas market in South Africa

The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 16


PetroSA’s plans going forward in terms of SA’s gas and liquid fuel supply

Asset DevelopmentProgramme

Continued Exploration

Mthombo Refinery

Mozambique GTL

the petroleum oil and gas corporation of south africa (soc) ltd reg. no. 1970/008130/07 overview of...

Documents

gas industry

south coast gas

gas sector petrosa

gas aggregator

south african gas sector

petroleum oil

operating gas infrastructure

gas field developments