Licence Number: PPL.sf.p.F1/225/2015 COMBINED LICENCE FOR THE CONSTRUCTION OF A PETROLEUM PIPELINE AND A STORAGE FACILITY. This licence is issued by the National Energy Regulator, hereinafter referred to as the Energy Regulator, in terms of the Petroleum Pipelines Act, 2003 (Act No. 60 of 2003). This licence is issued to South African Gas Corporation (Pty) Ltd (Company Registration No. 2014/061136/07) hereinafter referred to as the Licensee This licence is only for the purpose of construction of: a) a petroleum products pipeline: from Komatipoort to Kendal in Mpumalanga Province, for the transportation of petroleum products; and b) an intermediate petroleum storage facility located at: Alkmaar Commercial Park, Portion 141 of farm Alkmaar 286 JT, Alkmaar, Mpumalanga Province. hereinafter referred to as the facilities The construction of the petroleum facilities permitted under this licence is subject to the terms and conditions as contained in this licence and/or amendments to these conditions as imposed by the Energy Regulator. Issued at Pretoria on this day of 2016. Mr Paseka Nku ACTING CHIEF EXECUTIVE OFFICER NATIONAL ENERGY REGULATOR Disclaimer: The publication of these draft licence conditions for public comment should not be construed as a decision by the Energy Regulator to grant the licence applied for. The Energy Regulator does not accept any responsibility for any loss that may be sustained as a result of reliance by any person, company/organisation on the information contained in these draft licence conditions.
COMBINED LICENCE FOR THE CONSTRUCTION OF A PETROLEUM PIPELINE AND A STORAGE FACILITY CHAPTER ONE: LICENSED ACTIVITY... 5 1. Licensed Activity... 5 2. Commencement and Duration of Licence... 5 CHAPTER TWO: GENERAL CONDITIONS... 7 3. General Conditions of Licence... 7 4. Compliance with Conditions of Licence... 7 5. Compliance with Legislation, Operation Codes and Standards... 7 6. Amendment of Licence... 7 7. Revocation of Licence... 7 8. Changes in Details of the Licensee... 8 9. Changes to the Facilities... 8 10. Interconnections... 8 11. Correspondence with NERSA... 9 CHAPTER THREE: SPECIFIC CONDITIONS... 10 12. Commencement and Completion of Construction... 10 13. Information for Monitoring Purposes... 11 14. Regulatory Reporting... 12 15. Entry, Inspection and Gathering of Information... 13 16. Provision of Information to the Energy Regulator... 13 17. Ancillary Obligations... 13 18. Whole Licence... 13 ANNEXURE A1: General Pipelines Route... 14 ANNEXURE A2: Pipelines Route Options... 15 ANNEXURE A3: Storage Facility Proposed Location... 16 ANNEXURE A4: Storage Facility Layout... 17 ANNEXURE B1: Details of the Storage Facility... 18 ANNEXURE B2: Details of the Pipelines... 19 ANNEXURE C: Project Phases and Activities... 21 ANNEXURE D: Legislation, Codes and Standards... 22 Page 2 of 23
DEFINITIONS In these licence conditions any word or expression to which a meaning has been assigned in the Act shall have the meaning so assigned, unless the context indicates otherwise: Act means the Petroleum Pipelines Act, 2003 (Act No. 60 of 2003) and includes Regulations; authorised person means authorised person as defined in the Rules; commencement date means the date contemplated in condition 2. licensed activity means the activity contemplated in condition 1 of these conditions; Regulations means Regulations made in terms of sections 33(1) and 33(2) of the Act; Rules means Rules made by NERSA in terms of section 33(3) of the Act. ACRONYMS/ABBREVIATIONS API means American Petroleum Institute AMSE means American Society of Mechanical Engineers IEC means International Electrotechnical Commission m 3 /hr means cubic metres per hour mm means millimetres m 3 means cubic metres Petromoc means Petroleos De Mocambique, SA SAGC means South African Gas Corporation (Pty) Ltd SANS means South African National Standards Transnet means Transnet SOC (Pty) Ltd Page 3 of 23
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CHAPTER ONE: LICENSED ACTIVITY 1. Licensed Activity 1.1 The Energy Regulator grants the Licensee a combined licence to construct: a) a 370 km long, 16 inch diameter petroleum products pipeline: from Komatipoort to Kendal in Mpumalanga, for the transportation of petroleum products; and b) an intermediate petroleum storage facility located at: Alkmaar Commercial Park, Portion 141 of farm Alkmaar 286 JT, Alkmaar, Mpumalanga (GPS Coordinates 25 26'53.67"S 30 49'49.05"E). hereinafter referred to as the facilities. 1.2 Details of the pipeline route options are provided in Annexure A1 General Pipeline Route and Annexure A2 Pipeline Route Options. 1.3 Details of the storage facility and the products to be handled are provided in Annexure A3 Storage Facility Proposed Location and Annexure A4 Intermediate Storage Facility Details. 1.4 This licence is issued to the licensee for the construction of the facilities contemplated in paragraph 1.1 for the storage and transportation of petroleum products only. 2. Commencement and Duration of Licence 2.1 This licence commences on the date of issue reflected on the licence certificate. 2.2 This licence is valid for a period of 25 (twenty-five) years from the commencement date. Page 5 of 23
2.3 The Licensee may, in accordance with the Act and the Rules, apply for an amendment or renewal of the licence. Page 6 of 23
CHAPTER TWO: GENERAL CONDITIONS 3. General Conditions of Licence 3.1 Sections 20(1) (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w), (x), (y), (z), (aa) and (bb) of the Act are conditions of this licence. 4. Compliance with Conditions of Licence 4.1 The Licensee must comply with all conditions of this licence. 5. Compliance with Legislation, Operation Codes and Standards 5.1. The Licensee must comply with all applicable legislation, operation codes and standards, including those listed in Annexure D Legislation, Codes and Standards. 6. Amendment of Licence 6.1. This licence may only be amended in accordance with the Act and the Rules. 6.2. The Energy Regulator may temporarily change these licence conditions in an emergency. 7. Revocation of Licence 7.1. This licence may only be revoked in accordance with the Act and the Rules. 7.2. Should the licensee fail to commence construction of the facilities within the time period contemplated in condition 12.1, the licensee must within 15 calendar days of the elapse of that time period, apply to the Energy Regulator for the revocation of this licence. Page 7 of 23
8. Changes in Details of the Licensee 8.1. The Licensee must, within 30 (thirty) days of changes in its control as contemplated in section 12(2) of the Competition Act, 1998 (Act No. 89 of 1998), notify the Energy Regulator of such changes. 8.2. The Licensee must, within 14 (fourteen) days of any change in its registered name, operating or trading name, registered address or other contact details, notify the Energy Regulator of such a change. 9. Changes to the Facilities 9.1. When approached by interested parties, the Licensee must negotiate for changes in the capacity of the facilities to be constructed. The cost of such changes must be shared equitably between the Licensee and the party requesting the change. 9.2. Any changes to the facilities to be constructed that, in terms of the Act, may require an amendment or revocation of this licence, or a new licence, must not be effected until the Energy Regulator has amended or revoked this licence or issued a new licence. 9.3. Changes to the facilities must be made in accordance with applicable legislation, codes and standards including those listed in Annexure D - Legislation, Codes and Standards. 10. Interconnections 10.1. The Licensee must allow interconnections with facilities of other licensees, as long as the interconnection is technically feasible and the person requesting the interconnection bears the increased costs occasioned thereby. 10.2. Any changes to the facilities to be constructed as a result of an interconnection that, in terms of the Act, may require an amendment or revocation of this licence, or a new licence, must not be effected Page 8 of 23
until the Energy Regulator has amended or revoked this licence or issued a new licence as the case may be. 10.3. Changes to the facilities as a result of an interconnection must be made in accordance with applicable legislation, codes and standards including those listed in in Annexure D - Legislation, Codes and Standards. 11. Correspondence with NERSA 11.1. All official communication with the Energy Regulator must be in writing and must be addressed to the Chief Executive Officer and copied to the Regulator Member Primarily Responsible for Petroleum Pipeline Regulation. 11.2. The Licensee must, in all correspondence with the Energy Regulator, quote the licence number as it appears on the licence certificate. Page 9 of 23
CHAPTER THREE: SPECIFIC CONDITIONS 12. Commencement and Completion of Construction 12.1. Construction of the facilities must commence within: (a) six (6) calendar months from the date of issue of this licence; or (b) six (6) months from the receipt by the Licensee of a final positive Record of Decision from the relevant environmental authorities in accordance with the National Environmental Management Act, 1998 (Act No. 107 of 1998) permitting the activities for which this licence is granted whichever is the latter and in any event within twelve (12) calendar months of the date of issue of this licence 12.2. The Licensee must prior to the commencement of the construction of the facilities provide the Energy Regulator with: (a) proof of the arrangements in terms of interconnection with the Petromoc and Transnet facilities for phase one (1) and phase two (2) respectively, as follows: (i) documentary proof acceptable to the Energy regulator, of its agreement with Petromoc and Transnet regarding the respective interconnections (hereinafter the Interconnection Agreements) (ii) the Interconnection Agreements must specify: a. the date of commencement and completion of construction of the interconnections; b. the licensee responsible for its construction; c. sign off procedures to be followed by both parties leading up to and during the construction of the interconnection; d. the design and technical specifications of the interconnection; Page 10 of 23
e. the location of interconnection (GPS coordinates); f. proof of land owner's permission at the site of interconnection; and g. insurance cover for both companies if something goes wrong in the construction being carried out by the other party that causes delays or other difficulties. (b) the final, revised engineering design drawings for the facilities, if any changes took place since the licence application was submitted; (c) the date on which construction will commence and provide the revised project schedule, if applicable (see ANNEXURE D: Project Phases and Activities); and (d) a report on the efforts made to conclude any Interconnection Agreement and the reasons why the efforts failed if an Interconnection Agreement cannot be concluded. 12.3. The phase 1 of the project must be completed and ready for operation within forty two (42) months of the commencement of the construction date contemplated in condition 12.2 (c) and phase 2 of the project completed and ready for operation within 66 months of the commencement of the construction date contemplated in condition 12.2 (c). 13. Information for Monitoring Purposes 13.1. The Licensee must provide the Energy Regulator with progress reports after every six calendar months from the date of issue of the licence. 13.2. The reports contemplated in condition 12.1 above, must be submitted within seven (7) days from the last day of every six calendar month period. Page 11 of 23
13.3. The first progress report must be submitted within seven (7) days of the last day of the six calendar months calculated from the date of issue of this licence. 13.4. The reports contemplated in condition 12.1 above must provide updates on: (a) progress towards and award of all Engineering Procurement and Construction contracts; (b) the progress made in obtaining a Record of Decision from the relevant environmental authorities for the construction of the facilities; (c) any negotiations contemplated in sections 20(1)(k), 20(1)(l), 20(n) and 20(1)(o) of the Act; (d) activities in the construction of the facilities compared to the project plan schedule contained in Annexure C - Project Phases and Activities (where there have been changes to the project schedule, the updated project plan must be submitted with the progress report); and (e) any other related matter. 13.5. Upon completion of construction of the facilities, the Licensee must: (a) provide the Energy Regulator with: (i) the as-built maps, drawings, diagrams and schedules, identifying any deviations and differences from Annexures A, B, C and D, and must provide reasons for such deviations and differences; (ii) the final audited costs of construction of the facilities; and (iii) a certificate or confirmation from a competent authority certifying or confirming that the facilities are fit for operation. 14. Regulatory Reporting 14.1 The Licensee must comply with volume 1 and volume 4 of the Energy Regulator s Regulatory Reporting Manuals published under Page 12 of 23
GN 1118 in Government Gazette No. 31392 of 10 September 2008, which may be amended by the Energy Regulator from time to time. 15. Entry, Inspection and Gathering of Information 15.1 The Licensee must, in a manner prescribed by the Rules, permit any authorised person to enter and inspect any property on which the licensed activity is taking place. 16. Provision of Information to the Energy Regulator 16.1 The Licensee must on request from the Energy Regulator, provide all other information the Energy Regulator may require to perform its functions under the Act. 17. Ancillary Obligations 17.1 The Licensee is responsible for compliance with these licence conditions regarding any work on the facilities or services that are the subject of this licence and/or that are subcontracted to other parties. 18. Whole Licence 18.1 This licence constitutes the entire licence and supersedes any prior understandings and agreements between the Licensee and the Energy Regulator. Page 13 of 23
ANNEXURE A1: General Pipelines Route Page 14 of 23
ANNEXURE A2: Pipelines Route Options Page 15 of 23
ANNEXURE A3: Storage Facility Proposed Location Page 16 of 23
ANNEXURE A4: Storage Facility Layout Page 17 of 23
ANNEXURE B1: Details of the Storage Facility Table 1: Details of the storage tanks Height, Operational Tank Id Tank Type Product Diameter, m m Capacity,m 3 Design Capacity, 001 External Floating Roof Petrol 10 000 002 Vertical Pressure Vent Diesel 20 000 TOTAL 30 000 m 3 Table 2: Mode of Operation Phase One INTAKE DISCHARGE MODE RATE (m 3 /hour) MODE RATE (m 3 /hour) Pipeline (ULP93 & D500) 171-400 Road 150 Rail Table 3: Mode of Operation Phase Two INTAKE DISCHARGE MODE RATE (m 3 /hour) MODE RATE (m 3 /hour) Pipeline (ULP93 & D500) 171-400 Road 150 Rail Pipeline Page 18 of 23
ANNEXURE B2: Details of the Pipelines Table 1: Pipeline details Phase One Route (from/to) Komatipoort/Ressano Garcia to Alkmaar, Mpumalanga (Node No. 1) Number of pump stations Number of pig lauching & receiving stations Nodeno. 1 Start & GPS coordinates Three maximum (two on Mozambique side: at 0, 70 and 140 km from Matola) One at each pumping station End & GPS Diameter, Planned Design Flow Length, m coordinates mm Capacity (m 3 /hour) direction 1 25 26'50.63"S 31 59'5.96"E 25 26'53.67"S 30 49'49.05"E 400 110 000 400 Unidirectional 1) Node denotes sections of pipeline system with different diameters and/or destination/branches Table 2: Pipeline auxiliary equipment Phase One Nodeno. 2 Pumpstation locations & GPS Pig launching/receiving stations & GPS coordinates coordinates Destination Depots 0 Matola 25 57'14.78"S 32 29'53.84"E Matola: 25 57'14.78"S 32 29'53.84"E Alkmaar 0 Ressano Garcia 25 36'55.36"S 32 14'12.38"E Ressano Garcia 25 36'55.36"S 32 14'12.38"E Alkmaar 1 Matsulu 25 31'15.50"S 31 18'37.41"E Matsulu 25 31'15.50"S 31 18'37.41"E Alkmaar 2) Node 0 denotes sections of the pipeline from Matola to Ressano Garcia Outside of NERSA mandate Table 3: Pipeline details Phase Two Route (from/to) Alkmaar to Kendal, Mpumalanga (Node No. 2) Number of pump stations Number of pig lauching & receiving stations Nodeno. 1 Start & GPS coordinates Three maximum (at 0, 50 and 100 Km from Alkmaar) One at each pumping station End & GPS Diameter, Planned Design Length, m coordinates mm Capacity (m 3 /hour) Flow direction 2 25 26'53.67"S 30 49'49.05"E 26 0'27.06"S 28 58'9.69"E 400 260 000 400 Unidirectional 1 Node denotes sections of pipeline system with different diameters and/or destination/branches Page 19 of 23
Table 4: Pipeline auxiliary equipment Phase Two Nodeno. 2 Pumpstation locations & GPS Pig launching/receiving stations & GPS coordinates coordinates Destination Depots 2 Alkmaar 25 26'53.67"S 30 49'49.05"E Alkmaar 25 26'53.67"S 30 49'49.05"E Kendal 2 Bambi 25 31'39.58"S 30 20'24.79"E Bambi 25 31'39.58"S 30 20'24.79"E Kendal 2 Wonderfontein 25 46'48.33"S 29 55'39.06"E Wonderfontein 29 55'39.06"E 25 46'48.33"S Kendal Page 20 of 23
ANNEXURE C: Project Phases and Activities Table 1: Development stages ACTIVITY DURATION, days START DATE PHASE 1: 725 02/11/2015 1) Application for licence 90 02/11/2015 2) Secure Bridging Finance 120 09/11/2015 3) Level 2 Basic Design & Engineering 141 20/05/2016 4) Fund Raising 240 22/01/2016 5) Legal and Funding Agreements 60 09/01/2017 6) Financial Closure 1 03/04/2017 7) Acquire Land & Servitudes 400 11/01/2016 8) EIA: Komati Nelspruit pipeline 421 11/01/2016 9) EIA: Alkmaar, Nelspruit Storage Facility 424 11/01/2016 10) EIA: Mozambique 120 11/01/2016 11) Risk Assessment 120 18/10/2016 12) EPC: Engineering, Procurement & Engineering 190 11/04/2016 13) Detailed Design 250 08/05/2017 14) Long Lead Items 170 21/02/2017 15) Pipeline Construction (Komatipoort to Alkmaar) 360 27/03/2017 16) Storage Facility Construction 240 13/03/2017 17) Commissioning Phase 1 1 28/02/2018 Matola Storage Upgrade and Rail Offloading 300 03/10/2016 Phase 2 Alternative 1: Concurrent Construction 620 04/02/2019 18) EIA Nelspruit-Kendal pipeline 421 04/02/2019 19) Pipeline Construction: Nelspruit-Kendal 360 03/02/2020 Phase 2 Alternative 2: Staggered Construction 762 04/02/2019 20) EIA Nelspruit-Kendal pipeline 460 10/02/2020 21) Long lead items 70 24/11/2021 22) Pipeline Construction: Nelspruit-Kendal 360 20/10/2021 Page 21 of 23
ANNEXURE D: Legislation, Codes and Standards The Licensee must comply with all relevant codes and standards including the following submitted in its licence application SANS 10089-1: 2008 The petroleum industry part 1; Storage and distribution of petroleum products in above-ground bulk installations. SANS 10105: The use and control of firefighting equipment. SANS 10089-2: 2008 The petroleum industry part 2; Electrical and other installations in the distribution and marketing sector. SANS 10108: 2005 The classification of hazardous locations and the selection of apparatus for use in such locations. SANS 10142-1: 2008 The wiring of premises. SANS 10123: 2001 The control of undesirable static electricity. IEC 60331: Fire resisting characteristics of electrical cables IEC 60332: Test on electrical cables under fire conditions IEC 60529: Degrees of protection provided by enclosures IEC 60540: Test method for insulation and sheaths of electrical cables and cords IEC 61000: Electromagnetic compatibility IEC 61508: Functional safety: Safety related systems IEC 61508 Functional safety of electrical/electronic/programmable electronic safety related systems. IEC 61511 Functional safety Safety instrumented systems for the process industry sector. API 6D: Pipeline valves API 14C: Manual of petroleum measurement standards API RP 520, Part 2: Guide for pressure-relieving and de-pressuring systems API RP 521: Flanged safety-relief valves API RP 551: Process measurement instrumentation API 650 Welded Steel Tanks for Oil Storage. Page 22 of 23
API 653 Aboveground Storage Tanks inspection, repair, alteration and reconstruction. BS EN 14015 Specification for the Design and Manufacture of Site Built, Vertical, Cylindrical, Flat-bottomed, Aboveground, Welded, Steel Tanks for the Storage of Liquids at Ambient Temperature and Above. EEMUA publication number. 159 Users guide to the inspection, maintenance and repair of aboveground vertical cylindrical steel storage tanks. The Licensee must also comply with all other relevant legislation, including but not limited to the following: Occupational Health and Safety Act, 1993 (No. 85 of 1993). The National Environmental Management Act, 1998 (No. 107 of 1998). The Environment Conservation Act, 1989 (Act No.73 of 1989). The National Water Act, 1998 (No. 36 of 1998). The Water Services Act, 1977 (No. 108 of 1977). National Environmental Management Air Quality Management Act, 2004 (No. 39 of 2004). The Hazardous Substances Act, 1973 (No. 15 of 1973) The National Health Act, 2003 (No. 61 of 2003). The National Building Regulations and Building Standards Act, 1977 (Act No. 103 of 1977). National Ports Act, 2005 (Act No. 12 of 2005). National Key Points Act, 1980 (Act No. 102 of 1980). NRS Quality of supply standards. Transnet National Ports Authority: Instructions governing the lease of sites for the reception, storage, handling and distribution of petroleum and chemical products (Revised August 2002). Page 23 of 23