1. Challenges facing capacity in the supply of bitumen Basil Jonsson Total Oil SA

2. Overview Bitumen demand Bitumen manufacturing Bitumen manufacturing capacity Factors influencing future supply

3. Refinery Transporting Mixing Drumming Storage Spraying SupplyChain

4. Annual global bitumen demand in 2000 Global consumption +- 103 million tons (RSA = 0.25%)

5. RSA bitumen demand vs road expenditure

6. Bitumen manufacture Bitumen is 100% locally manufactured product Produced from the residue of crude distillation 100% of the crude is imported 75% of the crude is refined into white fuels eg petrol, diesel etc The residue not used for bitumen manufacture is further processed as bunker fuel oil (coastal refineries)

7. Petroleum products LPG Petrol Paraffin Diesel Lubricants Heavy fuel oil Bitumen Distillation of crude oil produces: Bitumen is +- 2.5% of crude oil consumption

8. Typical bitumen manufacture Heavy crudes Vacuum Distillation Atmospheric Distillation HardSoft Bitumen grades Air Blowing Bunker Fuel Oil

9. Crudes suitable for bitumen 1500 known crudes 100 suitable for bitumen

10. Variability of crude oil

11. Bitumen supply in Southern Africa Gaborone Windhoek Johannesburg Mossel Bay Saldanha Cape Town Pretoria Mbabane Maputo East London Port Elizabeth Richards Bay Durban Bloemfontein Kimberly Maseru Pofadder Messina Pietersburg Crude oil refinery Sapref Calref Enref Natref Synfuel plant Mosgas Secunda Sasol Sasolburg

12. Production capacity Refinery Crude Bbls/day Bitumen Tons/day Bitumen % crude Calref100,0005003% Enref120,00010005% Natref100,0005003% Sapref180,0006002%

13. Production capacity cont… Production capacity exceeds local demand – 262,000 ton demand in 2005 vs 780,000 ton/annum production capacity –Therefore RSA is a net exporter of bitumen +- 150,000 ton/annum

14. Factors influencing bitumen supply Growth in fuels demand vis- à-vis bitumen will result in : –Increased refinery throughput (debottle necking vs expansion) –Increase in quantity of residue –More bitumen available –Increase in visbreaking of vacuum distilled residue for fuels –Increase demand for lighter crudes –Investment in coking plants

15. Factors influencing bitumen supply Environmental compliance will result in : –Cleaner fuels –Increase demand for low sulphur crudes –Investment in desulphurisation units for fuels refining dedicated bitumen non fuels refining –Lower fuming bitumen technology –Replacement of coal tar binders with bituminous binders

16. Factors influencing bitumen supply Tankage and loading capacity at refineries –Road tanker congestion at peak demand –Delays incurred due to testing reduce turnaround time of tankage –Blending & dispatch facilities configured for JIT Ageing work force –Diminishing skills and experienced operators –‘Right first time’ production

17. Factors influencing future bitumen supply End consumer requirements with respect to: –Performance grade specifications eg SHRP –Compatibility requirements of secondary producers with polymers and modifiers –Hard penetration grades for high modulus asphalt –Blending of volatile cutback bitumen

18. Conclusion RSA has the manufacturing capacity to exceed the local demand for bitumen into the foreseeable future There is no known reason to believe that this situation should change