1. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 Overview of the South African Gas Sector and the role of PetroSA Presented to the Parliamentary Portfolio Committee on Energy 09 September 2014

2. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 Our Key messages in relation to Gas Sector PetroSA is well positioned to be the gas aggregator and the agent of the State to take on the challenge of growing the gas sector in South Africa. We have accumulative experience in the gas industry across the entire value chain including access to proprietary GTL technology. Our projects are of national significance (beyond Mossel Bay) and are fully aligned to that of the National Development Plan (NDP). 1 2 3

3. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 CEF alignment The CEF Group mandate is to invest in and develop gas and gas infrastructure in a manner which is commercial and can attract investment. PetroSA is the implementing agent under CEF. Integration of iGas into PetroSA will complement existing capabilities to be able to strenghten the value proposition of PetroSA in the gas sector 1 2 3

4. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 Our Mandate Complement & promote Government policy & strategic thrust Advance energy goals and objectives as set out in various policy instruments, E.g. Energy White Paper (1998), Energy Security Master Plan ( 2007), Medium Term Strategic Framework (2009-2014), National Development Plan ( 2007), Medium Term Strategic Framework (2009-2014), National Development Plan Complement & promote Government policy & strategic thrust Advance energy goals and objectives as set out in various policy instruments, E.g. Energy White Paper (1998), Energy Security Master Plan ( 2007), Medium Term Strategic Framework (2009-2014), National Development Plan ( 2007), Medium Term Strategic Framework (2009-2014), National Development Plan Operate as a commercial entity and create value for the shareholder Pay tax and dividends Pay tax and dividends Operate as a commercial entity and create value for the shareholder Pay tax and dividends Pay tax and dividends Advance national objectives in the petroleum industry Spearhead industry transformation Spearhead industry transformation Advance national objectives in the petroleum industry Spearhead industry transformation Spearhead industry transformation 4

5. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 PetroSA has been a pioneer in integrated GTL business and gas field developments in South Africa Established in 2002, PetroSA owns one of the world’s largest GTL refinery. Multiple years of experience in developing and operating gas infrastructure. Business spans petroleum value chain Produces diesel, gasoline, kerosene and specialty products Has produced ~70 MMbbl crude oil & 1 Tcf of natural gas to date. Has upstream presence in South Africa, Equatorial Guinea and Ghana. 5 PetroSA owns proprietary GTL technology

6. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 South Coast Gas 2007 EM Field & Satellites 2000 Project Ikhwezi (tight gas) FA Satellites 1997 FA Field 1992 Historical Interventions to Sustain the GTL Refinery in the face of declining reserves We have years of experience in developing and operating complex gas infrastructure.

7. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 The need for Gas in South Africa 7 South Africa: South African government recognizes the need for gas (NDP 2030/Draft IEP/IRP); Diversify current energy mix AND reduce carbon footprint. Gas-to-Liquids (GTL): Declining feedstock; Sustain the Mossel Bay economy Growth opportunity to move into production of specialty chemicals; and Establishes markets for upstream / shale gas. Power: 2013/14, Eskom spent R10.5-billion on diesel to operate its two OCGT’s in the Western Cape. This was R8.1-billion above the R2.5-billion set aside by NerSA in its price determination. Gas is a cleaner, ‘cheaper’ & more efficient source of energy; Western Cape imports ~2050MW to meet its daily demand. Source: Department of Energy, 2013 Current Energy Mix: Gas currently accounts for only 2.8% in terms of primary energy source! It is envisaged that 14% of electricity will be generated from gas by 2030.

8. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 Current gas supply sources are limited and under-developed ResourceReservesMarketsStatus/Future Projects Block 9 (South Coast – RSA)~0.4 TcfMossel Bay GTL RefineryCurrent production Project Ikhwezi Additional prospects Pande/Temane (Mozambique) & Huge gas reserves >120tcf in Rovuma Basin, North of Mozambique ~3 TcfMozambique and Sasol’s Sasolburg and Secunda petrochemical plants, industrial customers and via Petronet pipeline to Kwazulu Natal Expansion of the current ROMPCO pipeline Future expansion possible Kudu (Namibia)~0.8 TcfNamibia and/or Western Cape Namibia power station Export to Western Cape Ibhubhesi (West Coast – RSA) ~0.5 TcfWestern CapePartnership: PetroSA (24%) & Sunbird Energy (76%) Production Right in place Coal Bed Methane (CBM)To be provenBotswana/RSA power- generation Too early in the development cycle Shale GasTo be provenRSA power-generation GTL and other Too early in the development cycle LNGWorldwide supplyRSA power-generation GTL and other Infrastructure to be developed PetroSA LNG Project 8 Note: Only ‘reserves’ are quoted in this table. The table does not include prospective or contingent resources, either offshore or onshore Investment and appropriate work programs to re-risk prospective resources and mature contingent resources into reserves categories are required

9. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 Achieve energy security through becoming the leading supplier of gas for the benefit of RSA. Sustaining the GTL refinery through development of additional feedstock Participate in the exploration and development of onshore gas (e.g. shale) Continued offshore exploration and commercialisation of offshore gas Target discovered gas/acquire gas in neighbouring Mozambique/Tanzania We are embarking on various initiatives to grow the role of Gas in the energy mix 1 2 3 4 5 Importation of LNG, and associated pipelines to increase the usage of natural gas in RSA, for both power generation, GTL and industrial customers

10. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 We are evaluating various security of supply options for South Africa Shale Gas ~390 Tcf? East Africa Gas West Africa & Rest of the World LNG Western Cape Atlantis/Cape Town OCGT Saldanha Bay IDZ Industrial Users Eastern Cape Mthombo Refinery Coega IDZ East London IDZ Mossel Bay GTL Refinery Gourikwa OCGT South Coast Gas/Oil West Coast gas LNG importation project in progress Plans are afoot to convert power plants: OCGTs to CCGTs US IEA has estimated that SA may hold 390 Tcf of shale gas reserves Project Mthombo entails building a new crude refinery for SA LNG importation project in progress Plans are afoot to convert power plants: OCGTs to CCGTs US IEA has estimated that SA may hold 390 Tcf of shale gas reserves Project Mthombo entails building a new crude refinery for SA ~150 TCF gas finds 10

11. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 PetroSA’s LNG importation project will unlock the growth potential for gas in South Africa Proposed LNG terminal to comprise the following: Offshore Infrastructure (jetty, trestle, cryogenic pipelines) Onshore Infrastructure (storage tanks, re- gasification equipment, auxiliaries) Associative Pipeline Infrastructure Will create opportunities to supply Independent Power Producers (IPPs) Various locations are being evaluated. 11

12. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 We are actively positioning ourselves for Shale Gas development 12 Shale Gas acreage The company is actively positioning itself:  Established a dedicated Unconventionals Unit;  Contributing to the shaping of a suitable Regulatory Framework;  Developing in-house capabilities;  Pursuing strategic partnerships for research and technology development (incl. Tertiary Institutions, Service Oil Companies); and  Sustaining and growing gas infrastructure and markets. The current regulatory uncertainty has resulted in a delay in the development of unconventional resources. We have past experience in shale gas drilling through Soekor! The currently limited seismic and well data results in geological uncertainty!

13. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 Amongst other initiatives, the NDP states… Short term:  Develop offshore gas.  Do exploratory drilling for economically recoverable shale gas reserves.  Promote investment in LNG landing infrastructure.  Introduce cleaner fuels. Medium term:  LNG infrastructure will be in place to power first CCGT’s. Addressed by PetroSA plans Our initiatives are in full support of the objectives of the DoE and the NDP 13

14. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 Required mechanisms to grow gas market Policy: An enabling Policy, Legislative and Regulatory Framework (certainty and clarity)  e.g. MPRDA should empower PetroSA as the NOC, Gas Utilization Master Plan ( GUMP -framework for the gas development) alignment with the Power Sector & PetroSA’s own plans Infrastructure: investment to unlock current constraints.  LNG diversifies supply and serves as a catalyst for indigenous gas development  Expand Gas pipelines to connect supply and demand Markets: Guaranteed and sustainable gas off-takers.  Erect Independent Power Producers (IPPs) in optimal locations Funding: Financial support for projects 14

15. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/07 Concluding Remarks Gas IS our business and gas is the future – it is imperative for SA to grow its gas market, and PetroSA is well positioned to lead in this space PetroSA has accumulative experience in the gas industry across the entire value chain including access to proprietary GTL technology PetroSA continues to cooperate with Eskom to provide a joint solution to change the energy mix in the country. Shale gas is a game-changer for SA - PetroSA is the most capable agent to supply the growing gas market in South Africa

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18. The Petroleum Oil and Gas Corporation of South Africa (SOC) Ltd Reg. No. 1970/008130/0718 PetroSA’s plans going forward in terms of SA’s gas and liquid fuel supply Sustaining the GTL Refinery Liquid Fuel Supply Asset Development Programme Continued Exploration Further develop domestic upstream prospects Mthombo Refinery Develop a new crude refinery in Coega, Eastern Cape. Mozambique GTL MozGTL Advances security of energy supply, in-country and regionally, could help meet domestic and regional diesel demand