Mpumalanga Business 2017 edition

OVERVIEW Oil and gas

OVERVIEW Oil and gas Mpumalanga is well-placed for a new national focus on gas. Anew national focus on gas as a fuel to supply energy will benefit the province of Mpumalanga, which is already geared to use and transport gas. Sasol and the provincial government have commissioned an in-depth technical feasibility study for a Petrochemical Technology Park to be located in the province, which report is due in the course of 2016. Evidence of national government’s new focus came in the 2016/17 budget speech of the Department of Energy, when plans for a 600MW gas-fired power plant were announced. The Department of Trade and Industry (dti) is creating a special unit to import liquefied natural gas (LNG) into the country, as part of the strategy to overcome the reliance on coal to power South Africa’s power stations. The vast gas fields off the coast of Mozambique are the most obvious source of supply, and in January 2016, Sasol obtained approval from the Mozambican government for a field development plan that will see hydrocarbon resources developed. It already produces gas and condensate from the Mozambican Pande and Temane fields, with most of the gas currently exported for use as feedstock for its chemical and synthetic fuel operations in South Africa as well as for the South African gas market. Sasol Energy supplies natural gas to Sasol Secunda Synfuels Operations and buys Sasol Secunda Synfuels Operations methane-rich pipeline gas to sell to customers in Mpumalanga and KwaZulu-Natal. SECTOR INSIGHT National government is backing a new 600MW gas-fired power project. • Sasol completed its R13.8- billion Secunda growth programme in 2016. Natural gas is an inexpensive alternative to coal. Although the coal industry still has life in it, it is a finite resource. Sasol’s R14- billion mine replacement project in Secunda, which extends the lifespan of its Southern Africa integrated value chain, is substantially complete. Petroleum Agency SA is the state agency responsible for promoting and regulating exploration and production of oil and gas in the country. Two methane-gas exploration rights have been granted to Highland MPUMALANGA BUSINESS 2017 48

OVERVIEW Exploration in the Evander area in Mpumalanga. Many of the big mining and manufacturing concerns in Mpumalanga have long-term contracts for the supply of gas with big gas companies. Afrox and Air Liquide are two of the biggest, with the latter having 3 500 national customers, which include Sappi and Sasol. Eskom’s innovative underground coal-gasification (UCG) project puts the power utility at the forefront of exploring ways of using coal in a more environmentally responsible way. UCG is a process whereby coal is converted into a synthetic powergenerating gas underground. When it comes to liquid petroleum gas, mostly used in households (and normally delivered by canisters), some changes are coming for consumers. The Competition Commission wants to make the sector more competitive, and aims to do this by reducing the duration of contracts between bulk sellers and refineries. (Mail & Guardian). South Africa’s LPG market is worth R1.5-billion per annum and the country produces 300 000 tons of product. One of the aims of the commission is to make LPG cheaper and more easily available to private consumers, who currently make up just 3% of the market. Fuel The Secunda Synfuels Operations facility, which forms part of the Sasol complex at Secunda, is the only commercial coal-to-liquid fuel plant in the world, and forms a vital part of South Africa’s oil and gas sector. Sasol is an international integrated chemicals and energy company that produces a range of product streams including liquid fuels, chemicals and low-carbon electricity. Several of the company’s divisions have plants at Secunda in Mpumalanga. In 2016 Sasol completed the R13.8-billion Secunda growth programme, which delivered an increase in volumes from Secunda Synfuels (to a record 7.8-million tons). Pipelines Together with its partners in Rompco (a consortium that includes a Mozambique gas company and iGas, the South African state agency for gas), Sasol will spend a total of R4.8-billion on pipelines to get gas to customers in Mozambique and in South Africa. The main pipeline runs to the Sasol facility at Secunda from the processing plant at Temane, Inhambane Province, southern Mozambique, 870km away. The upgraded and expanded pipelines should be able to carry upwards of 200-million gigajoules per annum. A 145km multi-product pipeline links the Sasol facilities at Secunda and Sasolburg in the Free State province. South Africa has four major pipeline networks: crude oil, gas, jet fuel and multi-product. The first litres of diesel fuel ran along Transnet Pipelines’ new multiproduct pipeline (NMPP) in January 2012, launching a new era for the transportation of fuels to the Highveld. The old pipeline was inaugurated in 1965. The NMPP will be able to carry about 26-billion litres of fuel every year. Refined products such as jet fuel, sulphur diesel and both kinds of octane petrol will be carried. State entity Transnet Pipelines owns, operates, manages and maintains a network of the 3 000km pipelines that make up the bulk of the national network. ONLINE RESOURCES Central Energy Fund: www.cef.org.za Petroleum Agency SA: www.petroleumagency.co.za PetroSA: www.petrosa.co.za Sasol: www.sasol.com South African Oil and Gas Alliance: www.offshoreafrica.co.za South African National Energy Association: www.sanea.org.za South African Petroleum Industry Association: www.sapia.co.za Transnet Pipelines: www.transnetpipelines.net 49 MPUMALANGA BUSINESS 2017