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1 Click to edit Master title style Transnet preparations for gas infrastructure in South Africa Heading heading heading Mark Gregg-Macdonald Date Transnet Group Executive: Planning & Sustainability South Africa Gas Options Conference - 29 September 2015, Cape Town

2 Contents Introduction to Transnet SOC Ltd Planning scenarios for gas supply and demand Developing South African infrastructure for gas Preparation of the Ports for short- to long-term gas facilities 2

3 Transnet SOC Ltd Transnet owns and operates South Africa s freight railway, ports and pipeline infrastructure 2015 results: Revenue R61,2bn EBITA R25,6bn Total assets R328,4 bn Capex: R33,6bn Gearing 40% Transnet National Ports Authority (TNPA) Transnet Port Terminals (TPT) Transnet Engineering (TE) Transnet Freight Rail (TFR) Transnet Pipelines (TPL) Capital Projects Foundation Property Academy 8 Commercial ports employees 16 Cargo terminals in 7 ports employees Manufacture of wagon rolling stock Locomotive assembly Maintenance Research & Development employees km railway 226 million tons freight General freight Heavy haul exports employees km of pipelines 18 billion litres petroleum products and natural gas 630 employees Capital projects management Corporate Social investment in health, sports, education Property portfolio Transnet Academy comprises schools of Rail, Engineering, Maritime, Pipelines, Security, Leadership 3

4 Transnet current Rail, Port and Pipeline infrastructure 4

5 Transnet planning scenarios for South African gas supply and demand bcf p.a. 1,900 1,800 1,700 1, Big Gas Large scale South African shale gas and/or off-shore and/or cheap Mozambique gas allows major industrial gas development and dominant gas power position. Industries use gas for beneficiation Export of gas and gas originated products from SA 1,500 1,400 1,300 1,200 1,100 1, High Gas Gas Power is SA s long-term dominant energy source Substantial transition of economy to gas-based energy Significant market up-side in transport sector: Marine Gas bunkering Commuter fleet conversions to gas - Bus and taxi Locomotive fleet conversions to gas Moderate Gas Expanded Ministerial determination for Gas-to-Power under Integrated Resource Plan (IRP) Gas sector dominated by Gas-to-Power Domestic off-take matures to credible volumes Regionally-specific piped gas distribution Low Gas Off-take based on Gas-to-Power demand under current Ministerial determination (IRP 2010) Low Gas Moderate Gas High Gas Big Gas Source: McKinsey study for Transnet demand planning

6 Mozambique Long-term planning for gas infrastructure Potential LNG Import facilities and Gas Distribution Hubs for Moderate to Big Gas Scenarios Existing Gas Pipelines Potential Pipeline for Moderate Gas Scenario Potential Pipelines for High to Big Gas Scenarios Operation Phakisa Phased Gas Pipeline Network concepts Offshore Gas fields Namibia Sishen Botswana Gaborone Coal Bed Methane Rustenberg Pretoria Sassolburg Waterberg Middleburg Phalaborwa Secunda Oranjemund Kimberley Lilly Pipeline Kudu Gas Field Ibhubesi Gas Field Karoo Shale Gas Bloemfontein Richards Bay Durban St Helena Bay Saldanha Cape Town Phakisa Phase 2 Beaufort West Phakisa Phase 3/4 Mossel Bay Ngqura Port Elizabeth East London Sources: Transnet Long-term Planning Framework 2015 and Operation Phakisa Oil & Gas Lab

7 Gas value chain overview Click to edit Master title style Infrastructure is a key enabler for the competitive development of the South African gas market Liquefaction Shipping Marine berthing, storage & regasification in ports Electricity generation to national grid Production Off shore UPSTREAM Production Fracking Pipeline transmission to gas distribution hubs General industrial and domestic use DOWNSTREAM The required infrastructure is regulated by the National Ports Act and the National Energy Regulator of South Africa (NERSA) Specific locations in the Ports system must be off-set by ensuring common-user access and scale-ability over time.

8 Collaborative preparation is in progress to enable the South African gas-to-power Click to edit programme Master and title development style of the gas market Transnet is working with Department of Energy Independent Power Producer (IPP) office to help expedite the 3126 MW Ministerial determination for Gas IPPs. Transnet is a member of Operation Phakisa Oil & Gas Lab for long-term gas infrastructure planning. Options for floating power plants Preparations in progress 1. Port site selection through Multi-Criteria Analyses (MCA). 2. Transnet National Ports Authority technical and commercial terms for berthing floating power plants at Richards Bay, Ngqura and/or Saldanha. 3. Servitude preparation for power evacuation from the berths to Eskom sub-stations. 4. Expedited applications to Eskom for the grid connections. 5. Environmental studies and consultations. 6. Expedited applications for environmental authorisations. 7. Regulatory alignment between DoE, NERSA, TNPA. 8. Commercial structure to support optimal risk allocation. 9. Early works mobilisation if required to expedite power delivery for the national grid. Medium- to long-term gas infrastructure Preparation in progress 1. Comprehensive studies for Floating Storage and Regasification Units (FSRUs), land-based regasification facilities and gas transmission infrastructure. 2. Identification of servitudes and footprints for the phasing of medium- to long-term gas infrastructure. 3. Environmental studies and consultations. 4. Regulatory alignment. 5. Ongoing gas demand modelling. 6. Commercial structuring for investment requirements. 7. Early works mobilisation where required to expedite power delivery and gas market development.

9 Transnet is committed to a collaboration process to achieve regulatory alignment in licencing, permitting and tariffs Key legislation Gas Act National Ports Act Electricity Regulation Act National Energy Regulator Act National Energy Act National Environmental Management Act Permits & licencing Economic Regulation Licence to import and trade gas -NERSA Construction and operation of gas facilities -NERSA Construction and operations within Ports -TNPA Port Access -TNPA and SAMSA Environmental permitting -DEA Licence to generate and transmit power -NERSA Power off-take -DoE, Eskom, National Treasury Servitudes -TNPA, SEZs and Private Health, Safety, Environment, Quality -Various authorities Gas tariffs -NERSA Port tariffs -Ports Regulator and TNPA Electricity tariffs -NERSA Multiple permitting and licencing requirements apply, with economic regulation, across the gas value chain Feedstock Gas Logistics Terminal Operations Transmission Power Plant Gas Transmission Power Transmission Gas Distribution 9

10 Gas infrastructure is being planned for South Africa s bulk cargo handling Ports of Saldanha, Ngqura and Richard s Bay Port Planning Port Engineering Marine Operations Environmental Safety Regulatory = Ports identified for Gas and Gas-to-Power enablement 10

11 Site planning and selection process per Port Multi-Criteria Analysis Criteria Weighting Score Site 1 Site 2 Site 3 Site 4 Site 5 Environmental Statutory Safety Risk Port Operations Terminal Downtime Future Development Potential Capital Cost Implementation Schedule 15 % % % % % % % % Multi-Criteria Analyses have been undertaken per Port. Servitudes have been identified. Environmental studies are proceeding. 11

12 Site planning and selection process per Port Site Layout Configuration Navigation Safety Operational Availability Port Infrastructure MCA Assessment Elements Basic engineering assessments have been completed on preferred sites 12

13 Environmental scope for short- to medium-term gas facilities in Ports Floating Power Plant and power evacuation Fuel Supply and Storage Power Generation Local Transmission Substation Transform Grid Transmission Floating Storage & Regasification and gas transmission Fuel Supply Storage and Regasification Gas Distribution Hub Gas Distribution Power Generation Local Transmission Substation Transform Grid Transmission Port boundary 13

14 Port of Saldanha: Preferred location - short-term Port Boundary Eskom Blouwater Substation Floating Power Plant Mooring Site (330 MW) KEY ISSUES: Limited impact on port operations Future development potential Lower safety risk than other sites Implementation schedule time to first gas Limited terminal downtime Disclaimer: This constitutes indicative port planning for information purposes only, subject to further studies. Transnet reserves all rights and will not be liable for the consequences of decisions made by any party arising from this information. 14

15 Port of Saldanha: Preferred locations medium term Port Boundary Eskom Blouwater Sub-station Floating Power Plant Mooring Site (330 MW) Gas Distribution Hub Floating Storage & Regas Unit (4 Mtpa) To IPP and other users Gas Transmission KEY ISSUES: LEGEND: Power Evacuation Gas Transmission LNG Transmission Limited impact on port operations Future development potential Lower safety risk than other sites Implementation Schedule time to first gas Limited terminal downtime Disclaimer: This constitutes indicative port planning for information purposes only, subject to further studies. Transnet reserves all rights and will not be liable for the consequences of decisions made by any party arising from this information 15

16 Port of Saldanha: Preferred locations long term Port Boundary Eskom Blouwater Sub-station Gas Distribution Hub To IPP and other users Gas Transmission LEGEND: Power Evacuation Gas Transmission LNG Transmission LNG carrier ( > 4 Mtpa) Land-based Storage and Regas Facility KEY ISSUES: Limited impact on port operations Future development potential Lower safety risk than other sites Implementation Schedule time to first gas Limited terminal downtime Disclaimer: This constitutes indicative port planning for information purposes only, subject to further studies. Transnet reserves all rights and will not be liable for the consequences of decisions made by any party arising from this information 16

17 Port of Ngqura: Preferred location short term Eskom Dedisa Sub-station KEY ISSUES: Environmental approvals limited dredging Limited impact on port operations Future development potential Implementation Schedule time to first gas Safety of navigation to be assessed Floating Power Plant (600 MW) Disclaimer: This constitutes indicative port planning for information purposes only, subject to further studies. Transnet reserves all rights and will not be liable for the consequences of decisions made by any party arising from this information 17

18 Port of Ngqura: Preferred location medium to long term LEGEND: Eskom Dedisa Sub-station Power Evacuation Gas Transmission LNG Transmission Gas Transmission Gas Distribution Hub KEY ISSUES: Environmental approvals limited dredging Limited impact on port operations Future development potential Implementation Schedule time to first gas Safety of navigation to be assessed Land-based Storage & Regas Facility LNG carrier ( > 4 Mtpa) Disclaimer: This constitutes indicative port planning for information purposes only, subject to further studies. Transnet reserves all rights and will not be liable for the consequences of decisions made by any party arising from this information 18

19 Port of Richards Bay: Preferred location short term Bayside Substation or Impala Sub-station Floating Power Plant mooring Site (820 MW) RBCT KEY ISSUES: Limited impact on port operations Future development potential Lower safety risk than other sites Disclaimer: This constitutes indicative port planning for information purposes only, subject to further studies. Transnet reserves all rights and will not be liable for the consequences of decisions made by any party arising from this information 19

20 Port of Richards Bay: Preferred locations - medium term Bayside Substation or Impala Sub-station Floating Power Plant Mooring Site (820 MW) Gas Distribution Hub FSRU (4 Mtpa) Option 1 FSRU (4 Mtpa) Option 2 RBCT LEGEND: Power Evacuation Gas Transmission LNG Transmission KEY ISSUES: Limited impact on port operations Future development potential Lower safety risk than other sites Disclaimer: This constitutes indicative port planning for information purposes only, subject to further studies. Transnet reserves all rights and will not be liable for the consequences of decisions made by any party arising from this information 20

21 Port of Richards Bay: Preferred locations long term KEY ISSUES: Limited impact on port operations Future development potential Lower safety risk than other sites Gas Distribution Hub LNG carrier ( > 4 Mtpa) Option 1 Land-based Storage and Regas Facility LNG carrier ( > 4 Mtpa) Option 2 RBCT LEGEND: Power Evacuation Gas Transmission LNG Transmission Disclaimer: This constitutes indicative port planning for information purposes only, subject to further studies. Transnet reserves all rights and will not be liable for the consequences of decisions made by any party arising from this information 21

22 Concluding comments o Transnet is preparing South Africa s Port system to ensure cost-effective, efficient, safe and environmentally responsible facilities for gas imports, storage and transmission. o Working with the Department of Energy, Eskom, Central Energy Fund, Department of Environmental Affairs, NERSA, the Ports Regulator, Special Economic Zones, SAMSA and other South African authorities, Transnet seeks to: o o o o o Reduce site risk for port locations and servitudes, Expedite environmental consultations and authorisations, Expedite enabling infrastructure, Secure permitting and licencing alignments, and Facilitate competitively priced gas infrastructure that supports South African economic growth. 22

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