Copyright protected The Fundamentals for Success Presented by : JCA Naude, Managing Director of Sasol Gas June 2005 Mozambique to South Africa Natural Gas Project : 9 th Africa Oil & Gas, Trade & Finance Conference NOT AN OFFICIAL UNCTAD RECORD
Copyright protected Pande Temane Vilanculos BEIRA MAPUTO Temane and Pande gas reserves - where it all started
Copyright protected Scope of the US $1.2 billion project GAS FIELD DEVELOPMENT Temane / Pande Nelspruit Komatipoort Maputo Beira Secunda
Copyright protected GAS PROCESSING FACILITY Temane Nelspruit Komatipoort Maputo Beira Secunda
Copyright protected Temane / Pande Nelspruit Komatipoort Maputo Beira 865 km PIPELINE Secunda
Copyright protected Temane / Pande Nelspruit Komatipoort Maputo Beira 865 km Pipeline Secunda GAS SUPPLEMENTS COAL
Copyright protected Temane / Pande Nelspruit Komatipoort Maputo Beira 865 km Pipeline Secunda CONVERT 500 CUSTOMERS Sasolburg
Copyright protected Temane / Pande Nelspruit Komatipoort Maputo Beira 865 km Pipeline Secunda Sasolburg REPLACE COAL WITH GAS COMPLETED JUNE 2004
Copyright protected What made the Project possible Initial Pande and Temane gas field assessments by ENH ENH and Sasol partners in developing the Pande and Temane gas fields Anchor load provided by Sasol Bi-lateral trade agreement – South Africa and Mozambique Attractive investment environment Effective involvement of government entities Regulatory dispensation in South Africa Balanced distribution of benefits
Copyright protected CPFCPF TransporterBuyer / Shipper / Distribution Field Moz 30% Sasol 70% CPF Sasol 100% Moz 30% Pipeline Sasol 100% 50% combined option Moz South Africa – in process of exercising 25% option Market Sasol internal and external markets Sellers Shareholding
Copyright protected Mozambique Country Manager appointed early Ministerial Steering Committee (Mozambique) Multi level interfaces with government, NGO’s Project Liaison Committee Co-ordinates government department activities Joint project task teams What worked well for the Project Structured interfacing at three levels Ministerial Governmental - National - Provincial - District Community Social development benefits to communities Cross border commission
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Stakeholder Interaction Tailored communication plan Transparency and mutual trust Managing stakeholder expectations Joint committees e.g. Projects, Promotions committee, Ministerial Task, Group and Project Liaison Committees Community interface forums and a complaints register Personal contact with Authorities in Mozambique and South Africa
Copyright protected Environmental Realities International best practices Environmental Task Team between Sasol and Mozambique Authorities Independent Environmental consultants were appointed Ongoing consultation with communities and authorities Respect for cultural symbols and community wishes Regular environmental audits Rehabilitation after pipeline construction
Copyright protected Stakeholder Management / Communication Communities South African Government NGO’s Local Authorities Landowners Media Community Leaders Business Partners South Africa and Mozambique Mozambican Government
Copyright protected Financing Agreements Highly complex hybrid financing-benefits of corporate loan and project financing Mitigation of potential political risk “Project Finance Deal of the year 2004 African Oil and Gas Bridging finance (from Sasol and Others) while finance was being arranged Financial institutions included Export Credit Agencies Multilateral Institutions Commercial Institutions
Copyright protected Numerous Agreements Bi-Lateral trade agreements-South Africa and Mozambique Regulatory/Licensing Agreements Commercial Agreements including Pipeline Shareholders Agreement Joint Operating Agreement Gas Sales and Transport Agreement Financing Agreements Construction Agreements Operating Agreements
Copyright protected Key Success Factors Successful negotiation of agreements Effective involvement of government entities Supportive legislative environment Stakeholder involvement Acknowledgement of key environmental issues Integrated project management structure Corporate Social Investment Servitudes and land issues Local content
Copyright protected Corporate Social Investment Needs identified through consultation with Communities and Local Authorities More than US$ 6 million was allocated for social investment projects along the pipeline route in Mozambique and South Africa
Copyright protected Corporate Social Investment – South Africa Flagship Projects include : Over 100 Computers to various schools Mobile Libraries Wheelchairs and Crutches for the disabled AIDS support centres and homes Construction of Classrooms
Copyright protected Corporate Social Investment - Mozambique Flagship Projects include : Primary Schools in various provinces Sports stadium in Vilanculos Community Bakeries 37 new water boreholes Repair of dams Medical clinics Community markets
Copyright protected Local Content Local suppliers preferred Contactors required to maximise the use of local resources 205 Mozambican companies received a share (29%) of the project Local Content clauses included in the contacts Training and transfer of skills Job creation (South Africa) Total of 430 workers employed for 20 months 760 workers at peak of project Job creation - Mozambique 1500 workers were employed during the project 3200 workers at peak of project
Copyright protected Sustainability of Success Honour agreements with all parties involved in the project Comply with all the requirements of the lending parties Continue with Social Investment Programs Government Liaison in Mozambique and South Africa Community communications and Stakeholder relationships Comply with all Regulatory requirements
Copyright protected The Way Forward Optimisation of volumes from existing gas reserves Exploration for new reserves Investigating further gas markets in Mozambique and South Africa Continued interaction with communities along the pipeline route in terms of sustaining the project
Copyright protected Benefits of the Project – South Africa & Mozambique Diversification of energy portfolio Environmental benefits Social development projects Major private sector investment in new infrastructure Employment and capacity development Revenue to Government for 25 years Opportunities for black economic empowerment Capacity development (e.g. pipe material) Unlocking of natural wealth Foreign investment Economic growth Social development projects Taxes / Royalty / Cash bonus Skills development Employment Infrastructure Capacity development (e.g. transport)
Copyright protected The Mozambique Natural Gas Project NEPAD in action ? Partnership between African countries Anchoring the development of Africa on its resources Acceleration of regional integration Economic and other benefits to both countries Capacity building Increased investments Social development Job creation Indeed, NEPAD in action !
Copyright protected Mozambique to South Africa Natural Gas Project : The Fundamentals for Success Thank You