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Overview of the South African Gas Sector and the role of PetroSA Presented to the Parliamentary Portfolio Committee on Energy

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Title: Overview of the South African Gas Sector and the role of PetroSA Presented to the Parliamentary Portfolio Committee on Energy


1
Overview of the South African Gas Sector and the
role of PetroSA Presented to the Parliamentary
Portfolio Committee on Energy
  • 09 September 2014

2
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
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
4
Our Mandate
5
PetroSA has been a pioneer in integrated GTL
business and gas field developments in South
Africa
  • Established in 2002, PetroSA owns one of the
    worlds 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.

6
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.
EM Field Satellites 2000
FA Satellites 1997

Project Ikhwezi (tight gas)
FA Field 1992
South Coast Gas 2007
7
The need for Gas in South Africa
  • 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 OCGTs 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.
  • 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.

Source Department of Energy, 2013
8
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 gt120tcf in Rovuma Basin, North of Mozambique 3 Tcf Mozambique and Sasols 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 station Export 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
Note Only reserves are quoted in this table.
The table does not include prospective or
contingent resources, either offshore or
onshore Investment and appropriate work programs
to re-risk prospective resources and mature
contingent resources into reserves categories are
required
9
We are embarking on various initiatives to grow
the role of Gas in the energy mix
1
Sustaining the GTL refinery through
development of additional feedstock

Importation of LNG, and associated pipelines
to increase the usage of natural gas in RSA, for
both power generation, GTL and industrial
customers
2
Achieve energy security through becoming the
leading supplier of gas for the benefit of RSA.
Continued offshore exploration and commercialisati
on of offshore gas
3
Participate in the exploration and development
of onshore gas (e.g. shale)
4
Target discovered gas/acquire gas in neighbouring
Mozambique/Tanzania
5
10
We are evaluating various security of supply
options for South Africa
East Africa Gas
West Africa Rest of the World
150 TCF gas finds
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

Shale Gas 390 Tcf?
Western 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
11
PetroSAs 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.

12
We are actively positioning ourselves for Shale
Gas development
  • 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.

The currently limited seismic and well data
results in geological uncertainty!
Shale Gas acreage
We have past experience in shale gas drilling
through Soekor!
13
Our initiatives are in full support of the
objectives of the DoE and the NDP
Addressed by PetroSA plans
  • 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 CCGTs.

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14
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 PetroSAs 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

15
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

16
End
Thank you for your attention
17
Back up slide
18
PetroSAs plans going forward in terms of SAs
gas and liquid fuel supply
Sustaining the GTL Refinery
Asset Development Programme
Continued Exploration
Liquid Fuel Supply
Mthombo Refinery
Mozambique GTL
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