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Similar to The Monetisation Opportunity: A Decade of Adding Value in Mozambique - I Hill (24 June 2014)
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The Monetisation Opportunity: A Decade of Adding Value in Mozambique - I Hill (24 June 2014)
- 1. better together ... we deliver 24 June 2014 The monetisation opportunity: A decade of adding value in Mozambique
- 2. 2 Strictly confidential. Not for further distribution better together ... we deliver Forward-looking statements Forward-looking statements: Sasol may, in this document, make certain statements that are not historical facts and relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. Examples of such forward-looking statements include, but are not limited to, statements regarding exchange rate fluctuations, volume growth, increases in market share, total shareholder return and cost reductions. Words such as “believe”, “anticipate”, “expect”, “intend”, “seek”, “will”, “plan”, “could”, “may”, “endeavour” and “project” and similar expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward- looking statements. These factors are discussed more fully in our most recent annual report under the Securities Exchange Act of 1934 on Form 20-F filed on 09 October 2013 and in other filings with the United States Securities and Exchange Commission. The list of factors discussed therein is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider both these factors and other uncertainties and events. Forward-looking statements apply only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise.
- 3. 3 Strictly confidential. Not for further distribution better together ... we deliver Contents Opportunities and challenges Adding value by overcoming challenges Growing value-add through strategic partnerships Developing a local gas market and enabling energy security Promoting local skills and supplier development Looking ahead: to the next decade and beyond Sasol’s capabilities
- 4. 4 Strictly confidential. Not for further distribution better together ... we deliver Mozambique resource potential presents new opportunities and challenges • Mozambique is on the verge of a step change in investment in the energy value chain: • Significant gas finds in Northern Mozambique could potentially change the energy landscape in the region • The north-western province of Tete is regarded as the largest undiscovered coal province globally; estimated output – 25% of the world’s coking coal by 2025¹ • The central and southern part of the country should continue to be a stable producer of hydrocarbons for years to come with upside potential • This opportunity comes with significant challenges: • Infrastructure not yet on par with development pace • Human capacity requires focused development • Southern African markets may be required to enable development of world scale industries in country • Resource led development could have a profound impact not only on the future of the country but also on the region.
- 5. 5 Strictly confidential. Not for further distribution better together ... we deliver Fortunately the country has experienced a stable business environment in the past decade ● Mozambique’s investor-friendly climate is an appealing destination for international capital. This needs to continue through: • Stable contracts • Constantly improving infrastructure e.g. new airports and stabilisation of electricity supply • Maintaining a fiscal regime that supports both the government and international investors ● To compete in the global arena, Mozambique should consider steps to: • Minimise restrictions on business activity, and • Simplify the tax system
- 6. 6 Strictly confidential. Not for further distribution better together ... we deliver Sasol’s capabilities Sasol is well positioned to unlock Mozambique’s resource potential due to our track record with partners, competitive technology and market position in the region ● Our integrated value chain involves aligning our diverse and interdependent businesses ● At the heart of our integrated value chain, which sets us apart from our competitors, is our ability to develop and commercialise technology at scale to produce bulk fuel and chemical products
- 7. 7 Strictly confidential. Not for further distribution better together ... we deliver Commercialisation of Fischer-Tropsch (FT) technology: coal-to-liquids (CTL) – Sasolburg and Secunda • Over 60 years ago, we pioneered the commercial application of converting low- grade coal to produce liquid fuels, gas and chemicals • 1950: oil-from-coal plant construction started in Sasolburg • Plant based on FT process to produce petrol, diesel, lubricants, chemicals and waxes • 1980s: 160 000 b/d Sasol 2 and Sasol 3 facilities commercialised in Secunda Sasol 1, Sasolburg, 1950 Sasol Secunda, 2012
- 8. 8 Strictly confidential. Not for further distribution better together ... we deliver Deployment of GTL technology through proprietary technology – ORYX GTL, Sasol’s GTL flagship In operation and highly successful ● Joint venture between Qatar Petroleum (51%) and Sasol (49%) ● 32 400 bbl/d design capacity, producing ultra-low sulphur diesel, naphtha and LPG ● Continues to achieve new production records and is consistently producing above its design capacity of 32 400 bpd ● Highly profitable venture with handsome returns to shareholders
- 9. 9 Strictly confidential. Not for further distribution better together ... we deliver Sasol, through partnerships, is well positioned to grow its footprint in Mozambique Sasol’s unique combination of capabilities enabled by effective partnerships has demonstrated our ability to unlock significant benefit for all stakeholders ● Strategic and sustainable partnerships ● Expertise and technology transfer ● Conducive environment for investment ● Gas ● Condensate ● (Oil) ● (Coal) ● Central processing facility ● Pipeline ● Power plant ● Base load – RSA ● Domestic markets ● Diversification Resources Markets Foundation Infrastructure
- 10. 10 Strictly confidential. Not for further distribution better together ... we deliver Ten years ago, through strong in-country partnerships, Sasol developed the Temane and Pande gas fields • Developed stranded gas fields through strong partnerships and technological expertise • Contributed to creation of favourable and safe investment climate and established E & P sector in country • Gas development with our partners has been a catalyst for socio- economic growth through: • Revenue generated from equity investment in the natural gas project • Tax revenue (one of the largest tax payers in the country) significantly higher when investment paid off • Capital investments and spin-offs from secondary industries The cumulative direct contribution to the Mozambique government over the first 10 years is US$616m while the contribution for the next 10 years is forecast to be US$3,5bn Total gross direct annual contribution to the GoM US$ millions 0 1 000 2 000 3 000 4 000 5 000 FY04 FY06 FY08 FY10 FY12 FY14 FY16 FY18 FY20 FY22 Cumulative contribution
- 11. better together ... we deliver Sasol is playing a key role in developing a domestic gas market and enabling energy security Local suppliers used on construction of power plant at Ressano Garcia
- 12. 12 Strictly confidential. Not for further distribution better together ... we deliver Our growth over the last decade has been based on strategic partnerships • Partners in the central processing facility (CPF): Sasol 70% (Operator), CMH 25%, IFC 5% • Equity in pipeline company (ROMPCO): Sasol Gas 50% (Operator), CMG (25%), iGAS (25%) • CTRG – joint venture for power generation at Ressano Garcia: EDM, Sasol New Energy • ENH – natural gas reticulation project agreement signed • PeSS is a joint venture between Sasol and Petromoc • PeSS supplies liquid fuel and lubricant products to the mining, road haulage, construction and agricultural segments throughout Mozambique • Currently PESS sells approximately 80 million litres of petroleum product annually Central Processing Facility, Mozambique PeSS petrol station in Maputo
- 13. 13 Strictly confidential. Not for further distribution better together ... we deliver A decade of partnering to develop and enable energy security Assisting in driving the domestic energy industry geared to service the region as a whole • 25 MGJ/a of the CPF’s expanded capacity sold to industries in Mozambique for power generation • ENH has contracted to purchase 6 MGJ/a for gas reticulation in the Maputo area • Partnership between Sasol New Energy and EDM for a US$246m, 140 MW-capacity gas engine project – due to be operational second half of 2014 calendar year • This will be the first long-term large-scale gas to power plant in the country Gas reticulation in Inhambane Province Mangugumete clinic, Temane Learners at Mabote vocational school
- 14. 14 Strictly confidential. Not for further distribution better together ... we deliver Developing the domestic gas market over the past decade Royalty gas from the Sasol operated gas fields has successfully stimulated a nascent domestic gas market 0.3 1.3 1.4 1.8 2.9 3.2 3.4 3.8 3.50.6 3.5 3.4 3.5 3.6 2.4 2.1 2.9 2.6 3.9 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 GJ(millions) 5% gas royalty entitlement analysis – GJ Natural gas in kind In cash
- 15. 15 Strictly confidential. Not for further distribution better together ... we deliver … resulted in a cross border value chain enabled by established markets in South Africa domestic markets now maturing South Africa Sasol Secunda Sasol Sasolburg 3rd parties RSA ● 50% Sasol Gas ● 25% iGas ● 25% Companhia Moçambicana de Gasoduto Sasol Gas Mozambique Central Processing Facility Pande Temane Natural gas fields 183 MGJ/a PPA ● 70% Sasol Petroleum Temane ● 25% Companhia Moçambicana de Hidrocarbonetos S.A. ● 5% International Finance Corporation Royalty gas ROMPCO pipeline Ressano Garcia In development Sasol New Energy 3rd parties
- 16. better together ... we deliver We are also investigating the upside potential of our current producing licence in the Petroleum Production Agreement (PPA) area and have completed a 2D seismic campaign in onshore licence Area A Central Processing Facility, Mozambique
- 17. 17 Strictly confidential. Not for further distribution better together ... we deliver Enabled and sustained by a decade of appraisal and exploration Pande/Temane PPA 1 728 km2 SPI Equity 70% CMH 25%; IFC 5% Status: Production PSA 1 792 km2 SPI Equity 100% Status: Appraisal Area A 8 400 km2 SPI Equity 90% ENH 10% Status: Exploration Sofala 5 752 km2 SPI Equity 85% ENH 15% Status: Exploration Block 16/19 2 965 km2 SPI Equity 50% Petronas 35%; ENH 15% Status: Exploration
- 18. 18 Strictly confidential. Not for further distribution better together ... we deliver Forecast Over US$2 billion committed to meet growing market demand Project Beneficial operations Objective Capital expenditure CPF expansion 2012 Expansion to cater for growing market demand US$222m Optimisation and sustainment projects e.g. LP & HP compression, electrical expansion etc. 2012-2018 To sustain and grow production to meet increasing market demand US$2bn Pipeline loop line 1 2014 Meeting growing market demand US$200m Total US$2,4bn 0 100 200 300 400 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 mmscf/d PPA production volumes Equity share, risked Mozambique (PPA)
- 19. 19 Strictly confidential. Not for further distribution better together ... we deliver PSA licence... building on initial foundation to meet evolving market demand into the next decade • The PSA licence is adjacent to the current producing PPA area: • Separated from the initial commercial discoveries to enable initial development of a 120 MGJ/a project • SPI conducted two phases of extensive appraisal drilling in 2003 and in 2007-2008 – both oil and gas discovered • An EWT was conducted on the Inhassoro oil rim – produced over 236 000 bbls of light oil until the end of March 2013 as part of the appraisal programme • Notice of commerciality declared in early 2013 on the following reservoirs: • Inhassoro G6 and G10 (oil) • Temane G8 (natural gas) • Temane East (natural gas) • Field development plan in progress – on track for delivery February 2015 !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 35°30'0"E 35°30'0"E 35°15'0"E 35°15'0"E 35°0'0"E 35°0'0"E 34°45'0"E 34°45'0"E 34°30'0"E 34°30'0"E 21°15'0"S21°30'0"S21°45'0"S 22°0'0"S ! ! 0 10 20 30 40 505 Kilometers N Inhassoro Vilanculos CPF Pande G-10 Temane G-8 Temane East Inhassoro G-6 Temane Main G-6 Oil Rim Inhassoro G-10 Inhassoro G-10 Tafula Corvo Pande Main !! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 35°30'0"E 35°30'0"E 35°15'0"E 35°15'0"E 35°0'0"E 35°0'0"E 34°45'0"E 34°45'0"E 34°30'0"E 34°30'0"E 21°15'0"S 21°15'0"S 21°30'0"S 21°30'0"S 21°45'0"S 21°45'0"S 22°0'0"S 22°0'0"S ! ! ! Pipelines Roads Towns_CPF PSA PPA 0 10 20 30 40 505 Kilometers N Inhassoro Vilanculos CPF Pande G-10 Temane G-8 Temane East Inhassoro G-6 Temane Main G-6 Oil Rim Inhassoro G-10 Inhassoro G-10 Tafula Corvo Pande Main
- 20. 20 Strictly confidential. Not for further distribution better together ... we deliver Our next exploration focus is Area A • 2 247km of new 2D seismic acquired over the entire concession from end October 2012 to mid October 2013, processing being completed • One large structural high up to 200km2 closure identified in southwest part of the concession, with associated amplitudes on far stacks at multiple levels. Updip from syn-rift graben feature with potential for both gas and lacustrine oil-prone source rock. Interpretation of remainder of block ongoing Grudja G-6
- 21. better together ... we deliver Sasol’s strong partnerships and experience in gas monetisation in the region open up opportunities in both the Mozambique and Rovuma Basins Sasol Gas Power Plant
- 22. 22 Strictly confidential. Not for further distribution better together ... we deliver Experience in gas monetisation in the region Our portfolio of downstream gas commercialisation options matches our resource estimates and includes power, chemicals and piped gas • At the heart of our integrated value chain, which sets us apart from our competitors, is our ability to develop and commercialise technology at scale to produce bulk fuel and chemical products • Based on this, and on our experience in gas monetisation in the region, we are actively pursuing monetisation avenues, not just in the Mozambique Basin, but also in terms of the Rovuma Basin gas • The Rovuma discoveries are large enough to support gas monetisation options in addition to LNG Chemicals plant Gas to power plant
- 23. better together ... we deliver Sasol is driving development of expertise, skills and promoting local suppliers Clara José is a student at Mabote vocational school
- 24. 24 Strictly confidential. Not for further distribution better together ... we deliver Driving the development of expertise and skills… In partnership with Government of Mozambique, we are contributing to building a talent pipeline to resource the oil and gas industry. Over the next five years we forecast spend of over US$12.4 million for: • A bursary programme, in partnership with MIREM, aimed at developing 30 students per annum, to study in the areas of geology, petroleum, drilling and reservoir engineering; - designed to ensure industry knowledge and develop life skills to prepare the bursars for life beyond university • Sasol’s learnership programme, a structured programme to develop sought- after artisans in the fields of electrical, instrumentation, mechanical fitting and production - spend to date: US$5 million • Leveraging Sasol’s university collaboration approach to build the necessary value adding capabilities within Mozambican universities Signing of the MoU – University collaboration initiative
- 25. 25 Strictly confidential. Not for further distribution better together ... we deliver …and local content • Initial natural gas project: worked with suppliers of goods and services in terms of a project funded by the World Bank to identify gaps and develop their safety systems in order to qualify as suppliers • CPF expansion: of the total cost of US$224 million, US$64 million spent with local suppliers • 100% local suppliers used for social projects • We have now implemented a new supply chain strategy which focuses on: • Preferential procurement: giving preference to Mozambican businesses wherever possible without compromising on safety and quality standards or on performance • Supplier development: fast tracking and assisting small- to medium-sized businesses in-country to build capacity so they can compete with international companies Mabote vocational school Local suppliers used on construction of power plant at Ressano Garcia
- 26. 26 Strictly confidential. Not for further distribution better together ... we deliver Looking ahead to the next decade ● Pursue exploration activities ● Optimise current assets ● Explore additional opportunities to monetise natural gas in country ● Explore for partnership opportunities to leverage Sasol’s gas monetisation technology ● Build local skills and supplier capacity ● Pursue sustainable relations with community stakeholders ● Continue to align our activities with government drivers, e.g., education, health, energy security and food security Operations Continue growing our heartland Licence to thrive
- 27. better together ... we deliver Thank you