LEVERAGING UPSTREAM OIL AND GAS RESOURCES AND OPPORTUNITIES FOR REGIONAL ENERGY INTEGRATION - Dr Gilbert Y. Yevi - Sasol
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
LEVERAGING UPSTREAM OIL AND GAS RESOURCES AND OPPORTUNITIES FOR REGIONAL ENERGY INTEGRATION Dr Gilbert Y. Yevi Senior Vice President -Sasol Exploration and Production International Africa Oil Week, Cape Town, 26 October 2017
Forward-looking statements
Sasol may, in this document, make certain statements that are not historical facts and relate to analyses and other information
which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate
to our future prospects, developments and business strategies. Examples of such forward-looking statements include, but are
not limited to, statements regarding exchange rate fluctuations, volume growth, increases in market share, total shareholder
return, executing our growth projects, (including LCCP), oil and gas reserves and cost reductions, including in connection with
our BPEP, RP and our business performance outlook. Words such as “believe”, “anticipate”, “expect”, “intend", “seek”, “will”,
“plan”, “could”, “may”, “endeavour”, “target”, “forecast” and “project” and similar expressions are intended to identify such
forward-looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward-looking
statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts,
projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should
underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand
that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations,
estimates and intentions expressed in such forward-looking statements. These factors are discussed more fully in our most
recent annual report on Form 20-F filed on 28 August 2017 and in other filings with the United States Securities and Exchange
Commission. The list of factors discussed therein is not exhaustive;; when relying on forward-looking statements to make
investment decisions, you should carefully consider both these factors and other uncertainties and events. Forward-looking
statements apply only as of the date on which they are made, and we do not undertake any obligation to update or revise any of
them, whether as a result of new information, future events or otherwise.
Please note: A billion is defined as one thousand million. All references to years refer to the financial year 30 June.
Any reference to a calendar year is prefaced by the word “calendar”.
Comprehensive additional information is available on our website: www.sasol.com
2
What you will hear today
Overview of Sasol group and its
1
activities
Can Africa capitalise on strong
2
demand for its resources?
Our contribution and growth
3
intentions
Regional integration opportunities
4
in Africa
3
Sasol at a glance
§ An international integrated chemical and energy company
§ Produces a range of high value product streams, including chemicals, liquid fuels and low-carbon
electricity
§ Major facilities in South Africa, USA and Europe
§ Tripling our commodity and specialty chemicals capacity in USA
§ World leader in gas-to-liquids (GTL) technology, with > 60 year’s experience
§ Growth opportunities in Southern Africa & North America
§ Ability to fund growth
Balanced portfolio Revenue breakdown - FY17
2% 1% ● Presence in 33 countries
● Over 30 000 employees world-wide
39% 37% Mining ● Reclassified to diversified chemicals sector by
Exploration & Production Int'l (EPI) MSCI from 30 November 2016
Energy ● Turnover of R172bn (US$13bn) for FY17
Base Chemicals Ø FY16 - R173bn (US$12bn)
20%
Performance Chemicals
4
Our global presence
We have exploration, development, marketing and sales operations in 33 countries
around the world
This map is broad indication of Sasol’s global presence as at 30 June 2016
5
Overview of our Exploration and Production business
¯ Mozambique Sasol Exploration and
MOZAMBIQUE N
A5-A Production International
(SEPI):
Indian Ocean develops and manages the
PSA(N) Blocks group's upstream interests
PPA
PPA(N) 16 & 19
Inhassoro
in oil and gas exploration
Block 16/19
Area A
PPA(S) CPF
and production
Area A Area A PSA(S)Vilanculos
ATLANTIC OCEAN PT5-C PSA 0 20 40 80 120 160 200
● Mozambique: the centre of
WGS_1984_UTM_Zone_36S
WKID: 32736 A uthority: EPSG Kilometers
GABON INDIAN OCEAN our growth strategy for
N
Southern Africa
Etame
Marin
● South Africa: ongoing
CONGO
ATLANTIC OCEAN
exploration interests offshore
MOZAMBIQUE
SOUTH KwaZulu-Natal
AFRICA
● Gabon: equity stake in an oil
SWAZILAND
producing asset
● Outside Africa: 50% equity
ER236 interest in a shale gas venture
INDIAN OCEAN in British Columbia, Canada
with Progress Energy
6
What you will hear today
Overview of Sasol group and its
1
activities
Can Africa capitalise on strong
2
demand for its resources?
Our contribution and growth
3
intentions
Regional integration opportunities
4
in Africa
7
African trends in 2017:
strong demand for African resources
Real GDP growth (%), average 2014-16
3,1%
● Economic prospects of the respective
Regional Economic Powers set to
lead to real GDP growth
● ‘Repricing’ of assets positions
countries to attract more foreign
0,2%
direct investment
● Promoting privatisation in an effort
(0,7%) to stimulate sustainable growth
Africa Latin America Russia and Central Asia
Over-reliance on a single commodity (% of total exports), 2010-15
● Lack of diversification resulting in
Oil dependency on commodity prices
>75% total exports
determined internationally
Oil
50-74% total exports ● Greater focus on government debt
Metal and minerals sustainability
>75% total exports
Metal and minerals ● Governance, political and business
50-74% total exports
reforms in many countries continue to
>No over-reliance on a single
commodity export
attract FDIs
Source: IMF, Deloitte
8
Resource investment has the potential to enable poverty
reduction on the continent
Resource investment in low- Potential poverty reduction in
income and lower-middle-income resource-driven countries
countries¹ 2012 ($bn)² Million people living in extreme poverty
Up to $17 trillion of
1 215
investment in oil and gas could
3 015
Potential to take more people be needed by 2030
out of poverty in resource-driven
372 countries than China did in the
past 20 years (~528 million) 540 million people in
1 770
3,6x resource-driven countries could
be lifted out of poverty by effective
Resource -540 development and use of reserves
835 extraction
843 303
investment in
835
1 245 lower-income
countries could
50%+ improvement in
303
potentially more resource-sector competitiveness
than triple from possible through joint government
1995-2012 2013-30 2010 2030
historical levels and industry action
Base case Non-resource-driven countries
Potential upside Resource-driven countries
Effective collaboration between African government and extractive companies
could transform Africa’s economies and the lives of its citizens
Source: McKinsey
9
Needs: Installed regional power generation mix
Coal continues to play a dominant role in the SADC region
Generation mix breakdown by country (2015) Power capacity additions by technology (2016-25)
100%
80%
Gas
39% Hydro
14%
Nuclear, 2%
60%
Onshore Wind, 1%
GW
Solar, 0%
40% Others, 1%
Oil
20% 8%
Coal
35%
0%
Eastern Northern Southern Western
Africa Africa Africa Africa
Coal Oil Gas Hydro Coal Oil Gas Hydro
Nuclear Onshore Wind Solar Others Nuclear Onshore Wind Solar Others
Source: IHS
10Needs: Projected power capacity by market
Coal continues to play a dominant role in electricity generation
Installed power capacity by market (2015) Power capacity additions by technology (2016-25)
90
Onshore wind Solar
12% 27%
60
Hydro Nuclear, 0%
12% Biomass, 0%
GW
Geothermal, 1%
30
Fossil fuels
48%
0
Northern Southern Western Eastern
Africa Africa Africa Africa
Nuclear Hydro Geothermal Coal Gas Fossil fuels Hydro Onshore wind Solar
Oil Wind Solar Others Nuclear Biomass Geothermal
* Installed capacity excludes distributed diesel-fired generation
not connected to the grid.
• Source: IHS Source: IHS
Overview of select African power markets / November 2016
11Enablers: Like the rest of the world, Africa must continue
to lower costs in order to operate in an environment of
radically lower oil prices
High FPSO leasing costs have maintained
opex levels in Ghana, despite falling
production
Despite opex savings of 6%, production has
fallen 12% increasing cost per boe
Field developments in Cameroon have
boosted production and reduced costs
Civil war has shut in production and limited
spend
Scale: change in 2017 opex (US$/boe)
New infrastructure in Tanzania has allowed
>5% increase
increased production at lower cost
5% increase to 5% decrease
5% to 15% decrease Deepwater Angola has seen a major cost
cutting drive
15% to 25% decrease
>25% decrease High cost mature fields in Gabon required
ongoing maintenance
Opex figures refer to lifting costs at field.
Excludes G&A expenses and transportation costs Falling production from late-life assets is
Countries producing less than 10 000 boe/d are excluded driving up the cost per barrel
Source: Woodmac
12Enablers: Reduce above-ground risk
Above ground risks: Security, political, financial, governance, etc… Source: IHS
13Enabler: Regional integration in Africa (a growing trend)
The need for countries to diversify their economies, increase trade and decrease their
reliance on minerals creates a “sudden” focus on regional approach and expansion
infra-structure
Enablers:
African Union’s Programme for Infrastructure Reduce above-ground risk
Development of Africa (PIDA)
Deepening
Tripartite Regional Economic Communities regional economic
integration by
collaborating on
market integration,
Inter-Regional Infrastructure Master Plan infrastructure and
industrial
development
SADC Regional Infrastructure Development
Programme and Infrastructure Vision 2027
“Frost & Sullivan predicts that in a few decades, cross-border trade should be greatly increased and the cost
significantly reduced, finally allowing sub-Saharan Africa to increase its contribution to the global economic
community.”
Source: Engineering News, Herald, Transport World Africa
14What you will hear today
Overview of Sasol group and its
1
activities
Can Africa capitalise on strong
2
demand for its resources?
Our contribution and growth
3
intentions
Regional integration opportunities
4
in Africa
15Mozambique: Centre of our growth strategy
for Southern Africa
Flagship
project
Natural gas
project
Value-add to
Mozambique
• Promotion of an
investment-friendly
climate
• Energy security and
solutions
• Economic and social
development
16Sasol and our partners played a key role in enabling
regional integration
The well-developed cross border gas infrastructure served as a key enabler for
monetisation of gas
The 2004 natural gas project initiated regulatory
co-operation between Mozambique and South
Africa.
To facilitate the project, the two governments
negotiated a general Bi-lateral Agreement on
Natural Gas Trade.
The overall objective of this treaty was to
promote and facilitate gas trade between the
two countries, and to establish an umbrella
agreement for specific gas trade projects.
Served as a milestone in Southern African
energy and infrastructure development,
initiating a much needed broadening of the
energy supply mix in the region and impacting
positively on both on the Mozambican and
South African economies.
17Through partnerships, Sasol and the Government of
Mozambique have leveraged Southern Mozambique to
pioneer the development of the industry
18Significant investment in the existing natural gas project
was enabled by established markets in South Africa
Initial US$1,2bn project involved:
• Temane and Pande gas field development: Beneficial
Operations (BO) - 2004 and 2009 respectively
• Conversion of Sasolburg from coal to gas feedstock
• Construction of 26-inch, 865 km pipeline from Temane
to Secunda
Expansion and exploration to the initial facility and growth
projects undertaken to date total approximately US$2bn and
include:
• Pipeline compressor: US$140m, BO - 2010
• Central Processing Facility (CPF) expansion:
US$227m, BO - 2012
• Loopline 1: US$200m, BO - 2015
• Loop Line 2 (LL2): US$210m - 2016
Royalty gas helped to stimulate the growth of gas-to-power
hub in Ressano Garcia
• CTRG, in partnership with EDM, is the first permanent
gas-to-power plant in Mozambique (US$246m,
BO - 2015)
19Sasol provided an anchor offtake to facilitate the
development of gas fields in Mozambique
Mozambique South Africa
PPA Royalty gas: ENH
• Electrification Maputo
• ENH gas reticulation reticulation
Pande Sasol
Royalty Secunda
gas
Central
Processing Ressano Sasol
Sasol
Facility Garcia Sasolburg
Rompco Pipeline
(CPF)
3rd
Temane
Central Térmica parties
MGC
Ressano Garcia
120 MW
175 MW
320 customers
6 customers for royalty gas 5 resellers
4 commercial customers of commercial gas
Initial consumption was mainly in South Africa - over the years consumption has increased
in Mozambique with Ressano Garcia developing into a gas-to-power electricity generation hub
20This in turn stimulated the development of gas markets
in Mozambique
Royalty gas Commercial gas
● Royalty gas is supplied to the following customers ● Domestic market has grown over time and
(as per INP – February 2017): includes the following offtakers of gas:
Customers Customers
ENH Matola Gas Company (MGC) (Gigawatt)
MGC ENH Kogas
Kuvaninga/EDM Reticulation
GS Cimentos Electricity
Autogas CTRG contract
Lonrho ENH contract
Growth in the Southern African gas market by country Growth in the Mozambique gas market by contract
200 35
30
150
Gas Markets PJ/a
Gas Market PJ/a
25
20
100
15
10
50
5
0 0
FY04 FY06 FY08 FY10 FY12 FY14 FY16 FY04 FY06 FY08 FY10 FY12 FY14 FY16
Total South African PJ Total Mozambique PJ Royalty Actual ENH-Kogas Aggreko Contract
Licensed Capacity PJ CTRG MGC ENH 2MGJ
21The Production Sharing Agreement (PSA) licence
is set to bring about the next wave of development
Adjacent to the current producing Petroleum Production
PSA Temane/Inhassoro
Agreement (PPA) area
An integrated oil, LPG, i.e. a Liquid Processing
Facility (LPF) and gas project
Inhassoro
Temane G10 Oil PSA-I-15
G10 Gas
PSA-T-27 Additional gas processing train (5th Train) could
9.0%
be required within the existing Central Processing
Temane G8 Temane East Gas PSA-I-16 Facility (CPF) in order to process the additional gas
Gas (G11/G11A/G12/G12A)
from the PSA
Inhassoro G6 Oil
Inhassoro G6 Gas
The Mozambique Gas to Power Project (MGtP) was
approved as the downstream gas monetisation
PSA-T-26
project from the initial phase of the PSA
The drilling campaign began in May 2016. Thirteen
development wells will be drilled including a water
well.
We are currently incorporating the subsurface
PSA supports the Government of Mozambique’s data from the initial six wells and are optimising
drivers for in-country monetisation, energy our development plan prior to awarding contracts
security, further industrialisation and skills for the oil project surface facilities.
development
The initial FDP includes development of four reservoirs for which Notices of Commercial Discovery (NCD) were submitted in February and May 2013
22We actively continue to advance our exploration
activities in the country
● Area A (Sasol 50% operator, Petrogas
40%, ENH 10%): Babane exploration
well was drilled in June/July 2017. The
target reservoir sands were drilled but no
hydrocarbon-bearing zones were
encountered
● Blocks 16 & 19 offshore shallow water
(Sasol 85% operator, ENH 15%):
currently waiting outcome of Strategic
Environmental Assessment
commissioned by the Mozambique
government
● PT5-C (Sasol 70% operator, ENH 30%):
5th license round block. Status: Ongoing
discussions to conclude Exploration and
Production Concession contracts (EPCC)
● A5-A (Sasol 25,5% Eni 34% operator,
Statoil 25,5%, ENH 15%): Status:
Ongoing discussions to conclude EPCC
23The Temane & Pande gas fields unlocked additional
socio-economic development in the country
● Contributed to creation of favourable and
safe investment climate and established
oil and gas sector in country
● Gas development with our partners has
been a catalyst for socio-economic
growth through:
● Tax revenue (one of the largest tax
payers in the country) significantly
higher when investment was paid off
● Capital investments and spin-offs
from secondary industries
● Social investment is key to our Students from Mabote Technical School and Gas reticulation systems has benefited
operations, spend in excess of household running on gas reticulation system over 300 families in Vilanculos
US$33m
● Leadership development and capacity
building – over 90% of the staff at
our gas processing plant are
Mozambican
● Progressively building Mozambican
talent pool for own and industry needs
Sasol has helped to improve access to education by building schools
24Value creation and shared prosperity from our
operations in Mozambique
Since inception of the natural gas project, Sasol and our partners have enabled
value sharing through our various businesses in the country
Increase job creation, skills About US$3 billion total investment since
inception across value chain
development
Over 300 permanent jobs sustained since
inception across our various businesses
Increase economic activity
Value created
through Sasol Contributed US$1 billion towards
and our government revenue
partnerships
Increase tax creation
Contributed US$495 million* towards tax,
awarded largest tax payer in the country
Increase local supplier base Contributed to local supplier base by
US$1,2 billion across our businesses*
* Total value includes Joint Ventures
25South Africa: Capturing value
Flagship
project
Exploration
licences
Potential value-add
to South Africa
• Stimulate local
economy
• Industry development
26We are also positioned to capture future value
by progressing gas exploration in South Africa
Top Masstrichtian Unc. (66Ma
Base Tertiary)
Durban basin offshore: ER236
Mid Campanian Unc. (75Ma)
● November 2013: Granted
Rift
exploration right for 82 000km² Bas
Santonian base of
slope fans
in
● April 2014: completion of 5 950km of
2D reconnaissance SR 1 : Valanginian : TOC : 2.5%, Hi : 400
SR2 : Lwr Aptian : TOC : 2% and HI : 300
R
seismic data Top Cenomanian Unc. (93Ma)
Early Aptian Unc. (125Ma)
● December 2014: 40% farm-in by Eni
S.p.A. who then became operator, Jc-B1
with Sasol retaining a majority 60% Hauterivian SR maturity
interest
● July 2016: completion of
Lead 2
4 300km² of 3D seismic acquisition
R Lead C
R
Lead 5
Lead
South
Lead
3
Data from ER-236 27What you will hear today
Overview of Sasol group and its
1
activities
Can Africa capitalise on strong
2
demand for its resources?
Our contribution and growth
3
intentions
Regional integration opportunities
4
in Africa
28Various factors are at play and need to be balanced
when driving regional integration and industrialisation
Strategic
objectives
Economic growth
(GDP)
In the energy Resources
sector, energy availability
security, • Domestic vs. import Trade balance
improving access • Supply profiles deficit
Resource
to modern energy • Maximise local benefit
services, tapping allocation
• Infrastructure • Domestic vs export
the abundant Resource
energy resources • Demand profile pricing Job creation
and up-scaling • Infrastructure • Gas and liquid fuels
financial pricing to power and
investment while industrial sectors
enhancing
• Subsidies
environmental Energy security
sustainability are
key.
Environmental
Coordination: sustainability
• Integrated Master plans
• Balance domestic usage vs imports/exports
• Fuel requirements and supply-demand guarantees
• Supply infrastructure for power plants and industry
Source: Adapted from McKinsey and Urban Africa
29Opportunities: developing a regional gas industry
Innovative use of existing policy and regulation can help to develop regional gas markets
• Secure anchor customers to provide base load in the region
Baseload
• Gas resources are sufficient for the region
• Multilateral involvement and collaboration underscored by partnerships
Collaboration
• Partnerships across the industry and region must be considered
• A regional and integrated Master plan is required
Master plans
• Regional energy charter would crystallise benefits for all participants
Securing • Leveraging majors to secure financing
financing • Managing market exposure with developed market governance
• Enabling and supportive regulatory and fiscal environment that is
Favourable regionally focused
regulations • Policy must be aligned, contextualised, clear, coherent and
reasonable creating investment opportunities
30Sasol has a compelling value offering
and proven track record
Sasol has a compelling
value offering and a proven
track record aligned with
host government growth
drivers:
● We invest for the long term
● We have an African heritage
● We have relevant capabilities:
● Willingness and capabilities
to develop integrated gas;;
● Significant market
presence;;
● Large project development
capabilities;; and
● Ability and willingness to
upskill state owned entities
capabilities
31In Summary
Africa is growing rapidly and so are its needs. The
continent must capitalize on its natural resources
The continent must continue creating favourable
environment for growth & FDIs
Continuation of economic, governance and
security reforms is a must for the continent
More regional integration and cross-border
cooperation will reduce cost and share risks
Sasol is an Africa based global chemicals & energy
company with experience in regional projects
We have a growing Exploration and Production
business in Africa, where our roots are.
Open to expanding our partnership base. We look
forward to being your partner of choice in Africa
32THANK YOU
You can also read
