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South African Business 2021

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Welcome to the ninth edition of the South African Business journal. First published in 2011, the publication has established itself as the premier business and investment guide to South Africa. This issue has a focus on economic recovery plans which have been put in place to tackle the challenges thrown up by the global Covid-19 pandemic. National government’s focus on infrastructure and the use of Special Economic Zones is highlighted, together with a feature on the nascent maritime economy. Regular pages cover all the main economic sectors of the South African economy and give a snapshot of each of the country’s provincial economies. South African Business is complemented by nine regional publications covering the business and investment environment in each of South Africa’s provinces. The e-book editions can be viewed online at www.globalafricanetwork.com.

OVERVIEW Oil, gas and

OVERVIEW Oil, gas and petrochemicals Exploration for gas off the south-eastern coast is hotting up. SECTOR INSIGHT Sasol is selling assets to reduce debt. The Karoo Deep Drilling and Geo-environmental Baseline Project is investigating the potential impact of shale gas drilling. (Credit: Council for Geoscience) There was great excitement in the oil and gas sector when Total and its joint venture partners announced in the 2019 that they had made a discovery at a site called Brulpadda, off the coast of Mossel Bay. The drilling was successful enough to warrant the return of the semisubmersible rig Deepsea Stavenger from Norway to South Africa and in August 2020 the rig was in place to drill the nearby Luiperd prospect in Block 11B/12B. The block, in the Outeniqua Basin 175km off the southern coast, covers an area of about 19 000km² in water depths of 200-1 800m. In October 2020, Total announced that it made a second significant gas condensate discovery on the Luiperd prospect. Total E&P South Africa BV is the operator (45%) with partners Qatar Petroleum International Upstream LLC (25%), CNR International (South Africa) Ltd (20%) and Main Street 1549 Proprietary Ltd (10%, of which Africa Energy has a 49% stake). Petroleum Agency South Africa (PASA), which encourages exploration and regulates the oil and gas industry, has noted the significance of international oil companies committing to exploration off South Africa’s coast. Increased confidence by such companies can only lead to growth in the industry, and with the massive gas finds in the Rovuma Basin off Mozambique in 2020, there are sure to be more companies interested in South Africa’s potential. Another drilling project – on land this time – was launched in September 2020 in the Karoo. The Council for Geoscience (CGS) announced phase two of the Karoo Deep Drilling and Geo-environmental Baseline Project (KDD) in Beaufort West. The geoscientific research project in the Karoo Basin is aimed at developing a geoenvironmental baseline model with a focus on assessing the potential environmental impacts of shale gas development in the Karoo. A Gas Utilisation Master Plan (GUMP) is being developed as a SOUTH AFRICAN BUSINESS 2021 62

OVERVIEW part of national energy policy. Private companies are responding to this changed environment. Renergen, which owns rights to a field of liquified natural gas (LNG) in the Free State, has started taking orders for its product from logistics companies. Bulk Hauliers International Transport (BHIT) has signed an agreement to take LNG to fuel 50 of its trucks, which should lead to lower operating and maintenance costs. South African Breweries is another client. Delta Natural Gas (DNG) Energy announced in 2019 the rollout of 400 natural gas refuelling sites across South Africa with a focus on the taxi and logistics sectors. The major economic sectors using gas are the metals sector and the chemical, pulp and paper sector. Brick and glass manufacturers are also big consumers. Anadarko Petroleum, a US company, is investing -billion to build a liquid natural gas (LNG) plant in Mozambique. The projected spin-offs for the South African economy are estimated to top R7-billion. A new addition to South Africa’s pipeline network is a pipe to get natural gas from Mozambique to Gauteng. SacOil’s R90-billion project will deliver gas to Johannesburg and nearby towns. International chemicals and energy company Sasol has several large plants in Mpumalanga and the Free State. Sasol Gas is one of the four Sasol operations at Secunda, supplying natural gas to Sasol Synfuels and buying Sasol Synfuels’ methane-rich pipeline gas. Air Liquide Large Industries SA, a subsidiary of French company Air Liquide, has purchased Sasol’s oxygen production site in Secunda for R8.5-billion. The site, which contains 16 air separations units, will continue to supply gas and oxygen to Sasol’s various plants in terms of a supply agreement. Sasol is selling a number of its assets in an effort to reduce debt. Large quantities of oil are transported around the Cape of Good Hope every year: 32.2% of West Africa’s oil and 23.7% of oil emanating from the Middle East. Irrespective of market volatility, the longterm prospects for shipping and oil and gas are strong enough for national government to pursue Operation Phakisa (which includes a strong maritime economy element) and for Transnet National Ports Authority to spend heavily on upgrading the nation’s ports. The Port of Saldanha has a new open-access liquefied petroleum gas (LPG) plant run by Sunrise Energy. The Department of Trade, Industry and Competition (dtic) has established a Gas Industrialisation Unit (GIU). The first two ONLINE RESOURCES National Energy Regulator of South Africa: www.nersa.org.za Petroleum Agency SA: www.petroleumagencysa.com South African National Energy Association: www.sanea.org.za South African Petroleum Industry Association: www.sapia.co.za sites identified by the DoE for liquefied natural gas (LNG) plants are Richards Bay (2 000MW) and the Coega Industrial Development Zone (1 000MW) in the Eastern Cape. This has the potential to turn the Richards Bay Industrial Development Zone (RBIDZ) and its Eastern Cape counterpart into energy hubs. The Coega IDZ is also home to the country first gasfired plant run by a private consortium, the Dedisa power plant. A new gas turbine open cycle power plant near Durban has been commissioned by Avon Peaking Power. The South African oil industry generates annual sales of about R365-billion and includes global giants such as Engen, BP, Shell, Total and Chevron. Most of the oil that feeds the country’s four crude-oil refineries is imported. The refineries are in Cape Town, Sasolburg and Durban (two). In addition to South Africa’s crude-oil refineries, natural-gas conversion plant, coal-to-fuel and gas-to-liquid crude-oil refineries, Sasol produces fuel from coal at its Secunda facility and PetroSA has the country’s only gas-to-liquid (GTL) facility at Mossel Bay. Getting fuel to the province of Gauteng is the key mission of the new multi-purpose pipeline (NMPP) which started delivering fluids in 2012. The NMPP terminals allow for greater flexibility in supply. Refined products such as jet fuel, sulphur diesel and both kinds of octane petrol are carried. ■ 63 SOUTH AFRICAN BUSINESS 2021

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