Comments and Responses Report - ERM · 2014-10-22 · The comments received from I&APs and responses are given in the first section of ... that this activity would trigger the activities

Annex D

Comments and Responses Report

ENVIRONMENTAL RESOURCES MANAGEMENT BURGAN CAPE TERMINALS

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The initial Draft EIR was made available for a 40-day commenting period to I&APs and commenting authorities from the 25 March to the 5 May 2014 in order to provide I&APs and commenting authorities with an opportunity to comment on any aspect of the EIA. The comments received from I&APs and responses are given in the first section of Table D1 below. The Draft EIR Revision 2 was then made available for a 21-day commenting period to I&APs and commenting authorities from 11 July to 1 August 2014 in order to provide I&APs and commenting authorities with an opportunity to comment on any aspect of the EIA and in particular, new information that was provided in response to comments received on the earlier draft. The comments received from I&APs and responses are given in the second section of Table D1 below.

Table D1 Comments and Responses Report for the Impact Assessment Phase of the Project

Comments Received on the initial Draft EIR: Issues/Comments Raised Commentator(s) Source Response from Project Team 1. Please can you clarify if the Port of Cape Town,

(TRANSNET), has put in a Disaster Management Plan for the possible evacuation of the Port and CBD, if there is a threat or possible explosion of a or all the fuel storage tanks?

2. Does the extent of the evacuation involve the 5 km buffer zone as indicated on plan?

3. Has the Disaster Management Plan been ratified by the City of Cape Town?

Dru Martheze Chief Engineer: Road Network Planning Transport & Public Works Western Cape Government

Email: 25 March 2014

1. Currently there is a disaster management plan for the Port of Cape Town, and a disaster management plan for the City of Cape Town. As part of the Pre-construction Planning Phase mitigation measures in the EMPr (see Section 3.3 of the EMPr), the existing Burgan Oil Emergency Response Plan (ERP) will need to be revised in response to the findings of the Quantitative Risk Assessment (QRA) undertaken as part of this EIA. The updated ERP will then need to be discussed with Transnet Port Authorities and the City of Cape Town, with the Burgan Oil ERP being revised where required to come in line with Transnet Ports Authority and the City of Cape Town. 2.The QRA findings show consequence distances which state that the maximum consequences do not extend up to 5km. Therefore based on these findings the immediate evacuation involves the up to the 5 km extent. 3. As mentioned above, the revised Burgan Oil ERP will be discussed with the City of Cape Town as part of the Pre-construction Planning Phase and revised where required in order to align with the City's Disaster Management Plan.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 1. A Major Hazard Installation Assessment to be

provided to this office. Fully detailed Fire Protection plan from an appointed Fire Consultant to be submitted as well.

George Hendricks Divisional Commander Fire & Life Safety: Table Bay Roeland Street Fire Cape Town

Email 02 May 2014 This has been included as a Pre-construction Planning Phase requirement in the EMPr (see Section 3.3 of the EMPr).

Construction Phase a) The construction activities must be managed in accordance with the National Dust Control Regulations R. 827 dated 01 November 2013 promulgated in terms of the National Environmental Management: Air Quality Act, 2004 stipulated and, b) The City of Cape Town Air Quality Management Bylaw, 2010, in this regard a comprehensive Dust Management Plan must be developed. c) Relevant sampling methods and analysis as specified in Annexure A of Government Notice 893 dated 22 November 2013 shall be used. d) Compliance with National Ambient Air Quality Standards for benzene (c6h6) in terms of schedule 2, section 63 of National Environmental Management: Air Quality Act 39 of 2004.

Phumela Hoza Senior Air Quality Practitioner City of Cape Town

Email 05 May 2014 a) This requirement has been added to the Construction Phase EMPr (see Section 4.8 of the EMPr). b) This requirement has been added to the Construction Phase EMPr (see Section 3.3 of the EMPr). c) This requirement has been added to the Construction Phase EMPr (see Section 4.8 of the EMPr). d) This requirement has been added to the Construction Phase EMPr (see Section 4.8 of the EMPr).

Operational Phase a) The City of Cape Town is the licensing authority for existing AEL listed activities, it has been noted that this activity would trigger the activities listed in terms of NEM: AQA, 2004. b) Category 2: Petroleum industry, the production of gaseous and liquid fuels as well as petrochemicals from crude oil, coal, gas or biomass. Subcategory 2.4: Storage and Handling of Petroleum Products. c) Compliance with listed activities and associated Minimum Emission Standards identified in terms of Government Notice 893 dated 22 November 2013 d) Relevant sampling methods and analysis as specified in Annexure A of Government Notice 893 dated 22 November 2013 shall be used.

a & b) An Atmospheric Emission Licence will be applied for separately by the applicant for permission for activities listed in terms of NEM: AQA, 2004 which it wishes to undertake. c) This requirement has been added to the Operational Phase EMPr (see Section 5.6 of the EMPr). d) This requirement has been added to the Operational Phase EMPr (see Section 5.6 of the EMPr).


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Issues/Comments Raised Commentator(s) Source Response from Project Team Should there be any fuel burning equipment, as defined in terms of the City of Cape Town Air Quality Management By-Law, no 6772, 30 July 2010, are to be installed an application in terms of Section 13 of the above mentioned By-Law for the installation of the such equipment must be submitted to the Air Quality Management Department.

This requirement has been added to the Pre-construction Phase EMPr (see Section 3.3 of the EMPr).

As mentioned in previous comments, the site has been transformed and there is no natural vegetation found on site, as the site never did contain natural vegetation as it is infill into the ocean. Therefore there is not anticipated to be any significant impacts on terrestrial biodiversity as a result of the proposed development.

Rhett Smart Scientist: Land Use Advisor | Scientific Services Cape Nature

Email 06 May 2014 The comment is supported by the findings of the EIA.

CapeNature’s mandate is for the conservation of biodiversity above the high water mark of the sea, therefore the conservation of marine biodiversity falls within the mandate of Department of Environmental Affairs: Oceans and Coasts (DEA:O&C). However, an oil spill at the facility has the potential to result in highly significant impacts on marine and coastal biodiversity.

The impact of a potential oil spill is assessed in Section 8.3 Unplanned Events. As part of the EIA a Quantitative Risk Assessment (QRA) has been undertaken. As part of the mitigation measures of the EMPr, Burgan Oil’s Emergency Response Plan must be revised in light of the findings of the QRA, and discussed with TNPA and the City of Cape Town. The ERP must be revised where required to come in line with the TNPA and the City of Cape Town disaster mitigation plans. The Department of Environmental Affairs: Oceans and Coasts (DEA:O&C) are stakeholders of this project as part of the EIA process.

The report has not included any information related to the marine and coastal environment that could be affected by an oil spill. Of particular concern for CapeNature is the impact it could have on coastal and marine avifauna, which includes threatened species such as the Endangered African Penguin (Spheniscus demersus). Many of the breeding colonies of these species are managed by CapeNature (others by SANParks), and therefore is within our mandate.

The DEIR Revision 2 has been updated with a specific impact assessing the potential impact on marine fauna as a result of an oil spill (see Section 7.3 of the EIR). The suggested mitigation regarding the oil spill contingency plans have been added into the DEIR Revision 2 and the EMPr as pre-construction planning mitigation.


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Issues/Comments Raised Commentator(s) Source Response from Project Team The Environmental Impact Report should be amended to assess the potential impacts of an oil spill on marine fauna, in particular the avifauna. DEA:O&C has developed oil spill contingency plans across the South African coastline and reference should be made to these. The bulk storage facility must also develop its own contingency plan should an oil spill occur. The location within the harbour should enable a spill to be contained within the harbour, however there is not enough information available to assess this and whether the potential impact will be acceptable.

This project does not fall within the Blaauwberg District and must be sent to the Central District, namely Dimitri Georgeades and Sandy Hustwick from the Environmental Resource Management Department in town. Kindly confirm whether you have already circulated the information to their office for comment.

Katy Spalding Environmental Professional Environment & Heritage Management Branch: District B Environmental Resource Management Department City of Cape Town

Email 31 March 2014 Dimitri Georgeades and Sandy Hustwick from the Environmental Resource Management Department have been added as I&APs and the report has been sent to them for comment.

Please provide me with the Draft Environmental Impact Report of locality plan in order for us to give our comments.

Ms René de Kock Statutory Control SANRAL

Email 21 April 2014 The DEIR has been provided and Ms René de Kock has been added as an I&AP.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 3. In summary, the main concerns in connection with the DEIR are the following: 3.1. The DEIR does not assess the impact of the Burgan facility on socio-economic conditions (including the impact on existing fuel refining, storage and distribution facilities). 3.2. The EAP has fundamentally misconstrued the nature and scope of the EIA process and the mandate of the environmental authorities in terms of NEMA. 3.3. The EAP and the Economic Specialist have deferred the evaluation of the merits of the application in the EIA context required in terms of NEMA to a discrete licensing process under the Petroleum Pipelines Act 60 of 2003. 3.4. The DEIR has not evaluated or assessed the key project-related impacts raised by stakeholders in the scoping process. 3.5. The enquiry into the need and desirability of the project, and the comparative assessment of the relative advantages and disadvantages of the facility, is deficient in several material respects. 3.6. Given the significant reliance placed by the DEIR on the strategic policy context in the fuel sector as a determining factor in motivating for the facility, the identification and assessment of alternatives is flawed.

Richard Summers Smith Ndlovu Summers Attorneys, on behalf of Chevron Refinery

Letter dated 05 May 2014

3.1 It is ERM’s position that the DEIR assesses the potential socio-economic impacts to an appropriate level. In order to assess the potential socio-economic impacts specifically associated with the fuel refinery in more detail, a separate specialist study was undertaken by an industry specialist Mr Paul Buley. This study is appended to the Economic Specialist Study (ESS), and the results have been integrated into the Economics Study and the revised EIR. 3.2 The EIA was undertaken in terms of the Environmental Impact Assessment Regulations (June 2010), as amended. The scope of the EIA was determined through a scoping process involving specialist inputs and incorporating comments from I&APs. The Scoping Report was approved by the authorities on 20 July 2012. The impact assessment focussed on providing the authorities with sufficient information to understand the impacts associated with the project and to make a decision whether or not to approve the application for Environmental Authorisation. 3.3 The DEIR has been revised to incorporate the findings of a new Fuel Sector Specialist Assessment report that has been appended to the Economic Specialist Report. This report specifically addresses the socio-economic impacts of the project on the Chevron Refinery. It is therefore disputed that the evaluation of the merits of the application regarding any impact have been deferred to another licensing process. 3.4 ERM is of the opinion that the DEIR did assess concerns raised by stakeholders in the scoping process. Furthermore this DEIR Revision 2 has sought to address all further comments made by stakeholders during the DEIR comment period. 3.5 The DEIR Revision 2 ‘Need and Desirability’ under Section 4.2 has been updated. Revision 2 is appropriate.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 3.6 ERM is of the opinion that considering the nature

of the project, the identification and consideration of alternatives as discussed in Section 4.19 of the DEIR

3.7. The DEIR does not contain an informed and defensible analysis of how the proposed development satisfies the national environmental management principles contained in section 2 of NEMA.

3.7 The DEIR and the DEIR Revision 2 do satisfy the national environmental management principles contained in section 2 of NEMA

4. The motivation for these concerns is set out in detail in this document. For the reasons set out herein, the DEIR falls short of the legal requirement for impact assessment and the report must be rejected. The EAP should be directed by the competent authority to address the deficiencies in the impact assessment as the DEIR fails to substantively comply with Regulation 31(2) of the EIA Regulations.

4. The DEIR Revision 2 has been updated with additional information and assessments in order to address stakeholder concerns.

Flawed impact analysis and assessment 5. A primary goal of the EIA process is to identify, predict and evaluate the positive and negative impacts associated with the project. This is required to enable appropriate stakeholder engagement and informed decisions by the competent authority. Although this purpose is recognised in the DEIR, both the DEIR and the Economic Specialist Report are ineffective as the reports have failed to identify and assess all impacts, both quantitative and qualitative, in connection with the project.

5. The DEIR and ESS identified and assessed a number of impacts. An additional economic study has been undertaken by an industry specialist (Mr Paul Buley) to assess in more detail the potential socio-economic impacts of the project on the Chevron Refinery. This report has been included as an Appendix to the ESS.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 6. Neither the EAP nor the Economic Specialist has demonstrated an ability to identify, predict or assess the impacts of the Burgan facility on socio-economic conditions, in the sense of an informed assessment of the potential consequences for the petroleum products market, and the impacts in the Western Cape in particular. The deficiencies in the impact assessment in the DEIR highlight the need for an expert understanding of the fuel sector market in the EIA context. This is a critical prerequisite to being able to identify, predict and evaluate all potential impacts associated with, and all potential consequences, flowing from the Burgan facility.

Richard Summers Smith Ndlovu Summers Attorneys


6. The DEIR and ESS identified and assessed a number of impacts. An additional economic study has been undertaken by an industry specialist (Mr Paul Buley) to assess in more detail the potential socio-economic impacts of the project on the Chevron Refinery. This report has been included as an Appendix to the ESS.

7. Given the potentially significant consequences of the Burgan facility, not only for Chevron’s operations but also the fuel market in the Western Cape, it is absolutely critical that the evaluation and assessment of the impact of the project on socio-economic conditions in the EIA context is effective and comprehensive. Our client has previously indicated that it would only be able to engage meaningfully in the EIA process on the basis of “a comprehensive understanding of the full consequences of the proposed facility”. It was on this basis that Chevron has endeavoured in good faith to identify and elaborate on the potential consequences of the Burgan facility for the fuel sector.



7. In order to further assess impacts on the local fuels sector, the DEIR Revision 2 also contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This assessment includes further assessment of: • Impacts on the viability of Chevron’s refinery

operations. • The likelihood that the proposed Burgan Oil

facility will be able to achieve financial viability. • The impact of the project on security of supply. This additional specialist report is included as an Appendix to the ESS.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 8. Despite an assurance from the EAP that the concerns and potential consequences of the Burgan facility (identified principally by our client during the scoping phase) would be addressed in the impact assessment phase, this has not occurred. Chevron’s inputs regarding the fuel sector context have largely been ignored. In support of this comment, Annexure A contains a Table summarising the impacts raised to date in connection with the facility, and the manner in which such impacts have been addressed in the DEIR



8. The DEIR Revision 2 has been updated to further address stakeholder comments obtained during the DEIR comment period.

9. The following consequences flow from the failure to undertake the requisite impact assessment: 9.1. The obligation to assess each identified potentially significant impact in terms of Regulation 31(2)(e) of the EIA Regulations has not been complied with. 9.2. The comparative assessment of project-related impacts required in terms of Regulation 31(2)(i) and 31(2)(o) of the EIA Regulations is inherently flawed. 9.3. The enquiry into the need and desirability of the project required in terms of Regulation 31(2)(f) of the EIA Regulations is not capable of determining or assessing the broader societal short-term and long-term needs. 9.4. The defective impact assessment has undermined the effectiveness of the public participation process. 9.5. The information contained in the DEIR is not capable of attaining the threshold of informed and reasoned decision-making in terms of the National Environmental Management Principles.



9.1 The issues and concerns raised by I&APs were considered by the specialists to identify specific significant impacts. . 9.2 A number of alternatives are addressed in the DEIR. These are clarified in Section 4.19 of the DEIR. The summary of the impacts in Tables 8.1 and 8.2 of the DEIR provide a comparison of the positive and negative impacts. The key findings of the EIA are summarised in Chapter 8 of the DEIR. The alternatives have been further addressed in the DEIR Revision 2. These alternatives include site location alternatives, site layout alternatives, technology alternatives and the No-go alternative. The summaries of the impacts in Tables 9.1 and 9.2 have been updated in the DEIR Revision 2.9.3 The Need and Desirability analysis has been updated and is included in Section 4.2 of the DEIR Revision 2. 9.4 The updated ESS and DEIR Revision 2 will be rereleased for an additional public comment period, prior to the compilation of the FEIR, which will also be released for a public comment period. 9.5 The DEIR which has been updated to the DEIR Revision 2 provide the competent authority with independent and appropriate information about a range of significant social, economic and bio-physical issues for decision making.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Comparative assessment 10. In order to comply with the EIA Regulations, the DEIR must: 10.1. Contain an environmental impact statement summarising the key findings of the environmental impact assessment; 10.2. comparatively assess the positive and negative implications of the project and alternatives; and 10.3. contain an informed, professional and reasoned opinion as to whether the activity should or should not be authorised.7



10.1 The DEIR and DEIR Revision 2 contain a Non-technical Summary that summarise key findings of the impact assessment. 10.2 Alternatives have been adequately and appropriately analysed in Section 4.19 of the DEIR Revision 2 and the positive and negative impacts have been summarised in Section 9.2.9. 10.3 This opinion is given in the DEIR in Chapter 8 Conclusions and Recommendations and the DEIR Revision 2 in Chapter 9 Conclusions and Recommendations.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 11. The implication of this requirement in the EIA Regulations is that the EAP must provide an independent and reasoned evaluation of the project impacts, applying his/her mind to the findings of the impact assessment. The DEIR does not satisfy the abovementioned requirements for the following reasons: 11.1. The identification and evaluation of the full range of impacts associated with the project is materially deficient (as illustrated in Annexure A). 11.2. The EAP has not comparatively assessed the positive and negative impacts of the Burgan facility and has not provided a reasoned and professional opinion as to (1) whether the benefits of the project outweigh the costs; or (2) whether the activity should or should not be authorised. The section of Chapter 8 of the DEIR titled “Balance Between Direct Costs and Benefits” does not satisfy this requirement. 11.3. Chapter 8 of the DEIR titled “Conclusions and Recommendations” does not satisfy the prescribed requirements for a reasoned evaluation of the merits of the project in that it merely summarises the various impacts considered individually in the DEIR. 11.4. There is no comparative assessment of project alternatives, including the “no-go” alternative. 11.5. The content of the DEIR dealing with socio-economic impacts is largely an extract from the Economic Specialist Report, and is devoid of any independent, reasoned and professional opinion required of the EAP.



11.1 See response to comment 9.1. 11.2 Positive and negative potential impacts have been appropriately identified and assessed. The DEIR Revision 2 Section 9.2.9 cost benefit analysis has been further updated. 11.3 Chapter 9 of the DEIR Revision 2 provides an appropriate conclusion and recommendation from the EAP. Issues of air quality, soils and groundwater, traffic, noise, visual, socio-economic and unplanned events were considered. The conclusions are a summary of the evaluation of the issues and significant impacts identified and assessed through the report. 11.4 A number of feasible and reasonable project alternatives were analysed and this is reported in Section 4.19 of the DEIR Revision 2.11.5 Socio-economic impacts that required an economic specialist study are taken from the ESS report. Other socio-economic impacts were assessed in Section 7.2 of the DEIR.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Deficient socio-economic analysis 12. Based on the nature of the concerns raised by Chevron in the scoping phase, it is clear that the majority of those concerns fall within the category of “socio-economic considerations”. One would have anticipated, therefore, that those concerns would have been investigated in depth in the EIA phase.



12. Socio-economic impacts have been assessed in depth and concerns investigated in the EIA. Furthermore the DEIR Revision 2 includes a further assessment by an industry specialist (Mr Paul Buley) on the potential impact on the Chevron Refinery specifically; this report is added as an Appendix to the ESS.

13. The EAP is obliged to ensure that the DEIR provides an impartial and competent assessment of the impacts of the facility on, among others, socio-economic conditions. This assessment has, however, not been undertaken. In this regard, the following is clear: 13.1. Nowhere in the socio-economic assessment contained in the DEIR are the impacts of the Burgan facility on the local fuel sector considered, evaluated or assessed (as demonstrated in Annexure A). 13.2. The EAP has failed to evaluate and assess the actual and potential impacts on socio-economic conditions.



Impacts on the local fuels sector are one of the major focus areas of the Economic Specialist Study (ESS) bearing in mind that, in order to remain unbiased, the local fuels sector includes existing participants such as Chevron and potential new participants such as Burgan Oil. In order to further assess impacts on the local fuels sector, the revised DEIR Revision 2 also contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This assessment includes further assessment of: • Impacts on the viability of Chevron’s refinery

operations. • The likelihood that the proposed Burgan Oil

facility will be able to achieve financial viability. • The security of supply impacts of the project.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 14. The absence of an impartial and competent assessment in the DEIR is evidenced by the following: 14.1. The DEIR relies on the following unsubstantiated claims (which have not been assessed in the manner required in the EIA context) in motivation for supporting the Burgan facility: 14.1.1. New petroleum storage/distribution facilities “should” enhance regional security of fuel supply. 14.1.2. The facility “would” allow greater flexibility in storage, importation and distribution without evaluating the impacts that this might have on the socio-economic environment. 14.1.3. “It seems likely that competition will be increased since the Project would introduce new import, storage and distribution facilities to Cape Town. These would be the first form of competition to the existing facilities owned and operated by Chevron.” 14.1.4. “Assuming that the storage and distribution facility will not be developed at the proposed site, Cape Town Port would continue to have inadequate fuel storage facilities and the mandate stated by the DoE would not be met.” 14.1.5. “The introduction of new facilities to store and distribute fuels should contribute to enhance security of supply levels in the region. It would allow for greater flexibility in storage, importation and further distribution at times and in circumstances where this is desirable.” 14.1.6. “Aside from the potential positive impacts of introducing a competing facility as such, the overall competitiveness and robustness of the industry should also be enhanced by the introduction of a new entrant that is independent of the existing petroleum suppliers.” 14.1.7. “Despite the present fuel pricing system, this should be viewed as a positive impact as it increases choice and the likelihood that costs would remain as low as possible.”



14 and subcomments: The DEIR and DEIR Revision 2 have been undertaken independently, through an independently run EIA process.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 14.1.8. “Note that given present administered prices, decreased costs would probably benefit fuel suppliers and not necessary be passed on to consumers in the form of lower fuel prices at the pump.” 14.1.9. “The construction and operational phases of the Project would result in spending injections that would lead to increased economic activity best measured in terms of impacts on employment and associated incomes.”



See comment above.

14.2. The DEIR presupposes only positive impacts (manifested by the alleged improved security of supply and flexibility in the storage, distribution and importation of petroleum products without considering the negative impacts of the facility).



14.2Positive and negative or potentially undesirable impacts are identified and assessed. The latter include: • Negative environmental externalities addressed

in Section 4.1.2 of the ESS. • Impacts on competitors addressed in Section 4.5

of the ESS.

14.3. The DEIR espouses only the perceived benefits and general desirability of competition in the fuel sector.



14.3 The ESS states that “While it is recognised that greater competition is not desirable in every situation, it is generally accepted that the onus is on those who argue against competition to, (1) comprehensively prove the merits of their case and (2) show that a given course of action or policy intervention to restrict competition would better serve to limit the negative impacts or un-intended consequences of a development. Notwithstanding the unique structure of the petroleum industry, attempts to restrict competition thus need to be treated with caution both conceptually and with reference to the mechanism through which competition is to be restricted, if at all.”

It cannot therefore be concluded that the ESS “espouses only the perceived benefits of competition”. The ESS recognises the perils of restricting competition without good reason (and the legislation governing competition in the South Africa).


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Issues/Comments Raised Commentator(s) Source Response from Project Team 14.4. The DEIR shifts the onus onto I&APs to establish the desirability of restricting competition in the fuel sector as opposed to the EAP assessing the need and desirability of the project in the EIA context.



The ESS considers competition carefully and concludes that the project has merit in terms of increasing opportunities for competition. It then contributes to the overall assessment of the need and desirability of the project by investigating its compatibility with relevant policy. In order to further contribute to assessment, the revised report also contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This assessment includes further assessment of the following which have a bearing on need and desirability: • Impacts on the viability of Chevron’s refinery

operations. • The likelihood that the proposed Burgan facility

will be able to achieve financial viability. • The security of supply impacts of the project. In its conclusion, the ESS also points out that “It is also important to recognise that the applicant will need to make a licence application to NERSA in order to be granted permission to establish the facility. As per its mandate, NERSA can then undertake an evaluation of the facility which includes whether the facility (taking cognisance of its size, purpose and location) is economically justifiable and appropriate thereby allowing for further consideration of factors related to ‘need and desirability’ and policy compatibility.”

14.5. The DEIR contains value judgments regarding the manner in which the petroleum industry operates (by way of example, the scenario where oil industry members have to utilise Chevron-owned infrastructure is viewed by the EAP in a negative light where that scenario is described in the DEIR as “not ideal”).



This statement is a reasoned judgement based on economic considerations which one is commonly required to make when conducting economic assessments. Stating that a situation in which there is no competition is ‘not ideal’ is consistent with the generally accepted view of economists in this regard. The statement is not a value judgement and also, therefore, not an example of value judgements being made in the report.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 14.6. The project is perceived only through the prism of potential positive impacts of introducing a competing facility (both at the level of principle and as a means of ensuring the overall competitiveness and robustness of the petroleum industry).



See response to comment 14.3 above.

14.7. The project is described as an “opportunity to facilitate competition in the market” which, as the DEIR indicates, should be viewed as a positive impact.



Agree that it should be viewed as a positive impact.

15. The EAP has failed to provide the impartial, reasoned and competent assessment of the impacts of the facility on socio-economic conditions that is required in the EIA context as an integral component of socio-economic impact assessment. Instead the EAP has simply relied heavily on the methodology, findings and conclusions in the Economic Specialist Report. This is evidenced by the following: 15.1. Paragraph 7.2.4 of the DEIR which is copied largely verbatim from paragraph 4.3 on page 25 of the Economic Specialist Report. 15.2. Paragraph 7.2.5 of the DEIR which is copied largely verbatim from paragraph 4.4 on pages 26-27 of the Economic Specialist Report. 15.3. Paragraph 7.2.6 of the DEIR which is copied largely verbatim from paragraph 4.5 on pages 28-30 of the Economic Specialist Report; and 15.4. Paragraph 7.2.7 of the DEIR which is copied largely verbatim from paragraph 4.6 on pages 30-33 of the Economic Specialist Report.



The EAP has relied on the methodology, findings and conclusions in the ESS. The alternative would be the re-interpretation or tweaking of the findings of the ESS which would increase the chances of mis-interpretations occurring. Risks in this regard are particularly high given the relatively complex and nuanced economic issues that were assessed. The DEIR which has been updated to the DEIR Revision 2 provide the competent authority with independent and appropriate information about a range of significant social, ecological, environmental and socio-economic issues for decision making.

16. For the above reasons, the DEIR has failed to evaluate and assess the actual and potential undesirable socio-economic effects of the proposed Burgan facility. The flaws in the impact assessment methodology in the Economic Specialist Report are highlighted separately below.



16.The DEIR Revision 2 includes an additional in-depth socio-economic assessment of the potential impact on the Chevron Refinery undertaken by an industry specialist (Mr Paul Buley), which has been added as an Appendix to the ESS.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Mandate of environmental authorities in terms of NEMA

17. Both the EAP and the Economic Specialist have fundamentally misconstrued: 17.1. The nature and scope of the investigation and assessment process required in terms of the EIA Regulations promulgated under NEMA; and 17.2. the mandate of the competent authorities in assessing applications for environmental authorisation in terms of section 24 of NEMA.



17. The DEIR which has been updated to the DEIR Revision 2 provide the competent authority with independent and appropriate information about a range of significant social, economic and biophysical issues for decision making.

18. With regard to the concerns raised during the EIA process in connection with the socio-economic impacts of the Burgan facility, the DEIR states that: “…it is NERSA that holds the mandate to evaluate the facility’s justifiability, taking account of policy imperatives, infrastructure needs and other relevant issues”.



18. ERM understands that this is part of NERSA’s mandate. However, it also understands that DEA&DP has a concurrent mandate.

19. The DEIR effectively sidesteps the analysis of socio-economic impacts by stipulating that the NEMA EIA process is not the appropriate mechanism for determining issues of policy and governance relating to petroleum imports. The DEIR claims that this is a governance issue falling within the mandate of the Department of Energy, as a well as a NERSA licensing function.



19. This is disputed. ERM is aware that DEA&DP have concurrent jurisdiction over the proposed project. However, ERM is of the opinion that the EIA process is not the appropriate mechanism for determining issues of policy and governance relating to petroleum imports. The DEIR and DEIR Revision 2 appropriately consider the project’s context from a policy and governance perspective. The DEIR and DEIR Revision 2 provide the competent authority with independent and appropriate information about a range of significant social, economic and biophysical issues for decision making.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 20. An analysis of the socio-economic impacts is further sidestepped on the grounds that: “…the facility would provide the infrastructure that would facilitate or allow for fuel imports in competition with Chevron’s local production. The companies that would pay Burgan Oil to use the facility would, however, be those engaging in importation, not Burgan Oil. This is an important distinction as it is these companies which would be governed by legislation governing fuel imports”; and “…In addition, focusing on import concerns would cause ‘collateral damage’ by ignoring the storage, fuel security and general supply flexibility benefits of the project.



20. The DEIR revision 2 includes an additional in-depth socio-economic assessment of the potential impact on the Chevron Refinery undertaken by an industry specialist (Mr Paul Buley), which has been added as an Appendix to the ESS. The DEIR which has been updated to the DEIR Revision 2 provide the competent authority with independent and appropriate information about a range of significant social, ecological, environmental and socio-economic issues for decision making.

21. By limiting the scope of the assessment in the EIA context, the EAP defers the evaluation and assessment of the actual and potential undesirable socio-economic effects of the proposed Burgan facility to be undertaken by NERSA in terms of the Petroleum Pipelines Act 2003. On this basis the impact assessment required in terms of NEMA has not been undertaken. The EIA process is, as a result, fundamentally flawed.



21. The DEIR which has been updated to the DEIR Revision 2 provide the competent authority with independent and appropriate information about a range of significant social, economic and biophysical issues for decision making.

22. Insofar as the EAP suggests that the evaluation and assessment of the “justifiability” of the project falls exclusively within the mandate of NERSA, this reflects a poor understanding of the nature of the legal requirement in terms of NEMA and the EIA Regulations.



See response to comment 21 above.

23. The fact that a discrete statutory process imposes additional licensing requirements on the same development (i.e. in addition to those imposed by virtue of section 24 of NEMA) does not detract from the obligation on the EAP to fulfill the requirements for impact assessment in terms of NEMA.





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Issues/Comments Raised Commentator(s) Source Response from Project Team 24. Insofar as the EAP suggests that the impacts should not be assessed because Burgan is not the company actually engaging in the importation, this too reflects a poor understanding of the nature of the legal requirement in terms of NEMA and the EIA Regulations. It is the role of the EAP to consider the impacts associated with the proposed activity. Burgan is the entity applying for authorisation for the proposed activity, and, irrespective of whether or not Burgan will be physically responsible for the importation, the facility will give rise to the impacts associated with both the construction and operation of that facility.



24. The DEIR and DEIR Revision 2 aim to adequately and appropriately identify and assess the potential socio-economic impacts as a result of the project. Furthermore, the DEIR Revision 2 includes an additional in-depth socio-economic assessment of the potential impact on the Chevron Refinery undertaken by an industry specialist (Mr Paul Buley), which has been added as an Appendix to the ESS.

25. Insofar as the EAP suggests that focusing on import concerns could cause “collateral damage”, the EAP’s comment is wholly inappropriate as it evidences a preference for the beneficial impacts of the proposed facility over potentially negative impacts. The EAP’s ability to undertake the requisite impact assessment in an impartial and objective manner is questioned. The EAP is requested to justify the comment that certain impacts are being excluded on the basis that this could give rise to “collateral damage.”



The ‘collateral damage’ statement is a reasoned judgement based on economic considerations which one is commonly required to make when conducting economic assessments. The statement is not considered a value judgement.

26. With regard to the legal requirements for impact assessment in terms of NEMA, section 24 of the Constitution and NEMA introduce an important criterion for considering future developments, namely the need for a particular development must be determined by its impact on the environment, sustainable development and social and economic interests. This is required in order to enable I&APs to engage meaningfully in the EIA process and the competent authority in terms of NEMA to consider the project-related impacts identified during scoping.



ERM agrees with this statement.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 27. In amplification of this criterion, the obligation on the EAP is to ensure that: 27.1. The actual and potential impacts on socio-economic conditions are identified and assessed. 27.2. The need for the development is considered against the backdrop of the assessment of actual and potential project-related impacts. 27.3. A comparative assessment of relative advantages and disadvantages of the project is undertaken. 27.4. The enquiry into whether the proposed development is justifiable is undertaken in light of the impact assessment and the enquiries listed above and an analysis of the broader societal needs.




28. The failure to assess impacts appropriately has, in addition to compromising the efficacy of the impact assessment, resulted in both (1) the enquiry into the need and desirability of the Burgan facility; and (2) the comparative assessment of project costs and benefits being compromised.



The Need and Desirability in Chapter 5 of the DEIR Revision 2 has been updated, and further assessments undertaken to address stakeholder concerns brought forward during the DEIR comment period.

29. The EAP is required to explain the justification for placing reliance on the Economic Specialist’s interpretation that: 29.1. The impact on existing developments is not a relevant consideration in the EIA process. 29.2. The need and desirability (i.e. justifiability) of the facility is to be determined exclusively by NERSA.



The ESS does not make such assertions.

Need and desirability 30. The strategic policy context in the fuel sector has been utilised by the EAP to serve as a determining factor in establishing the need and desirability of the project, rather than using the policy context as a conceptual framework for informing the enquiry into need and desirability in the EIA context.



The strategic policy context is an important aspect in determining the need and desirability of a proposed project. The Need and Desirability section has been updated in Chapter 5 of the DEIR Revision 2.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 31. The Need and Desirability Guideline provides that whilst applicable policy is a relevant consideration, NEMA requires that, in addition to the policy context, the merits of the application must be assessed at project level in the EIA process. As such, the policy context should provide only the framework for the consideration of need and desirability. The policy context should not be construed as determinative of the net societal welfare of a particular project – as the EAP has done in this instance.



See response to comment 30.

32. Critical to an assessment of the merits of the application is the need to assess ecological, social and economic impacts. The Need and Desirability Guideline stipulates that the “EIA must specifically provide information on these impacts in order to be able to consider the merits of the application”



32. The DEIR Revision 2 appropriately identifies and assesses ecological, social and economic impacts.

33. As indicated above, a critical flaw in the DEIR is that the report states that determining whether the Burgan facility constitutes justifiable economic and social development is an evaluation required to be undertaken by NERSA and not by the competent authorities under NEMA. The EAP ignores the fact that NEMA provides an independent statutory basis for considering whether a development is justifiable – specifically within the EIA context.



33. The DEIR and DEIR Revision 2 provides the competent authority with the appropriate and adequate information for decision making purposes.

34. Section 4.2 of the DEIR – dealing with the need and desirability of the project - is based exclusively on a high level policy review of the oil and gas sector. The DEIR fails to provide an appropriate consideration of need and desirability as contemplated in the Need and Desirability Guideline.



34. Chapter 5 of the DEIR Revision 2 has been updated with additional analysis on the need and desirability of the project.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 35. The need for the facility described in the DEIR is based exclusively on the strategic and infrastructure-related considerations without any consideration of the merits of the application in the project context. The justification put forward by the EAP for the need for the facility includes: 35.1. The need for increased imports and infrastructural requirements. 35.2. The need for liquid bulk storage and distribution facilities. 35.3. The need to ensure security of fuel supply and strategic fuel stocks.




36. The desirability of the facility has been determined with reference to the following: 36.1. Competition in the petroleum industry is a desirable objective. 36.2. The facility will increase competition in the petroleum industry.




37. The NEMA enquiry into the need and desirability of the Burgan facility has been compromised by (1) the failure to evaluate and assess the adverse social and economic effects of the proposed development; and (2) the EAP’s misinterpretation of the nature of the legal requirement in terms of NEMA and the scope of the EIA process.




38. On this basis the DEIR should be rejected in terms of Regulation 34(2) for failing to comply with Regulation 31(2) in several material respects.



The DEIR and DEIR Revision 2 have complied with Regulation 31(2).


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Issues/Comments Raised Commentator(s) Source Response from Project Team 39. The Need and Desirability Guideline provides that a consideration of “need and desirability” essentially involves an assessment of whether it is the right time and the right place for locating the activity being proposed. There has been no assessment as to time and place for a facility of this nature in the DEIR. Had the DEIR assessed the current and projected future supply and demand for petroleum products in the Western Cape, the economic modelling would have revealed Chevron’s ability to fully cater for the local demand currently and in the foreseeable future. The DEIR should have assessed the risks associated with increasing supply ahead of demand. On this basis the DEIR should be rejected for failing to comply with the Need and Desirability Guideline.



See response to comment 34 above. The DEIR Revision 2 need and desirability section has been updated in Chapter 5.

Comments on the Economic Specialist Report 40. With regard to the methodology, findings and conclusions in the Economic Specialist Report, several concerns are raised in connection with the scope and content of that study.



ERM takes note of these.

41. The Economic Specialist Report claims to have assessed the impacts with reference to a basic cost benefit analysis, augmented by a “consideration of wider economic impacts and issues”. The cost benefit analysis is informed principally by: 41.1. The project’s financial viability; and 41.2. non-market socio-economic environmental impacts.



41. The cost benefit analysis of the ESS is not only informed by the project’s financial viability and non-market socio-economic impacts. The ESS has considered relevant impacts and has done so to the level of detail deemed appropriate in order to provide adequate information on impacts. In order to assess impacts further and respond to comments, the revised report also contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This input includes further assessment of: • Impacts on the viability of Chevron’s refinery


will be able to achieve financial viability. • The security of supply impacts of the project.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 42. In amplification of this, the Report describes the motivation for the project on the following grounds: 42.1. The project is compliant with the National Development Plan (NDP) and its recommendation that larger strategic fuel stocks be held to ensure security of supply and the NDP’s finding that local refining capacity necessitates imports; 42.2. The current lack of competition in the petroleum industry is not ideal and it is likely that potential changes in the petroleum industry will allow for increased competition in the industry; 42.3. The project represents an opportunity to facilitate competition in the petroleum market for storage and distribution; 42.4. The project is financially viable and the environmental externalities and costs associated with the project are likely to be negligible (and, therefore, in the Economic Specialist’s opinion, the benefits outweigh the private and public costs); and 42.5. The project is compliant with and furthers the future economic development goals of the City of Cape Town as set out in the City’s Integrated Development Plan, in that the project leads to further investment, economic growth and employment opportunities in the City of Cape Town.



In keeping with good practice and the DEA&DP Guideline for Involving Economists in EIA Processes, the ESS provides an assessment of the project to inform decision-making. Motivations are left out of this exercise in favour of objective assessment of relevant impacts.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 43. The abovementioned analysis is informed by a skewed or biased perspective influenced by the Economic Specialist’s failure to assess the project’s net social welfare, financial viability, risks and impacts to the appropriate degree required in the EIA context.



In keeping with good practice and cognisant of the declaration of independence, impacts have been assessed in an unbiased fashion. The ESS has considered relevant impacts and has done so to the level of detail deemed appropriate in order to provide adequate information on impacts. In order to assess impacts further and respond to comments, the revised report also contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This input includes further assessment of: • Impacts on the viability of Chevron’s refinery



Net social welfare 44. The basic function of the economic specialist is to determine whether a project will enhance net societal welfare. Investigating impacts on overall welfare requires considering the efficiency, equity and sustainability of the project.





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Issues/Comments Raised Commentator(s) Source Response from Project Team 45. The Economic Specialist Report does not appropriately assess whether the project will enhance net social welfare. The following reasons are advanced in support of this: 45.1. The Report has not assessed the actual and potential undesirable socio-economic effects of the proposed Burgan facility. 45.2. The Report has not assessed whether the objectives of the project could be achieved more efficiently through alternative mechanisms (e.g. the existing bulk petroleum product storage infrastructure at the Milnerton and Killarney Tank Farms). As such, there has been no engagement with the issue of efficiency because a consideration of efficiency is supposed to raise the issue of whether alternative forms of the project would constitute a more efficient use of resources. 45.3. The failure to consider the efficiency of the project through a comparative assessment of alternatives also impacts on the adequacy of the Report’s assessment of the need and desirability of the project. 45.4. Need and desirability, as a critical component of project assessment in the EIA context, should comprise of an assessment of the relevant considerations in relation to the feasible and reasonable alternatives. There has been no analysis of whether the objectives of the project can be achieved more efficiently through alternatives.



The entire ESS focuses on the question of net societal welfare. In addition, the revised report contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This assessment includes further assessment of: • Impacts on the viability of Chevron’s refinery


will be able to achieve financial viability. • The security of supply impacts of the project. 45.1: Negative or potentially undesirable impacts are identified and assessed. These include: • Negative environmental externalities addressed in

Section 4.1.2 • Impacts on competitors addressed in Section 4.5 45.2: In keeping with accepted EIA practice, the report and overall EIA confines itself to the assessment of feasible and reasonable alternatives. Various alternatives were have been addressed (see Section 4.19 of the DEIR Revision 2). 45.3: See response to comment 45.2 above 45.4: See response to comment 45.2 above


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Issues/Comments Raised Commentator(s) Source Response from Project Team 45.5. The requirements for assessing the sustainability of a project include: 45.5.1. Whether the project is likely to be financially viable over the long term and whether it will be economically sustainable; 45.5.2. whether there are risks to the long-term success of the project;



45.5.1 and 45.5.2.: The issue of financial viability and risks to the project are addressed in Section 4.1 of the ESS as part of the direct cost-benefit analysis section of the report. This section concludes that financial viability is not a certainty (i.e. there are clearly risks as with all commercial ventures). However, The available information gives no reason to anticipate financial failure that would argue against the project. Bear in mind that other risks such as environmental risks associated with pollution are dealt with extensively by other specialist contributing to the EIA. In order to further assess viability risks, the revised DEIR Revision 2 also contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This assessment includes further assessment of the likelihood that the proposed Burgan facility will be able to achieve financial viability.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 45.5.3. whether the project will affect the viability of existing facilities of the same type, with consequences for the job security of the employees of those existing facilities; 45.5.4. whether the project will lead to the closure of some or all of the existing facilities of the same type; and 45.5.5. the cumulative effect of the proposed development together with existing developments of the same type on the environment and socio-economic conditions. 45.6. The Report does not adequately assess the first two requirements of the sustainability enquiry through its failure to investigate comprehensively the financial viability of the project and through its failure to identify and address any long-term risks associated with the project. 45.7. The Report does not assess at all the last three requirements of the sustainability enquiry, through its failure to consider and assess the actual and potential undesirable socio-economic effects of the proposed Burgan facility.



45.5.3., 45.5.4 and 45.5.5: In order to further assess impacts on these aspects, the revised DEIR Revision 2 also contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This assessment includes further assessment of: • Impacts on the viability of Chevron’s refinery

operations including potential closure. • The likelihood that the proposed Burgan facility

will be able to achieve financial viability. • The security of supply impacts of the project. 45.6: See response to comment 45.5.1 and 45.5.2 above. 45.7: See response to comment 45.5.3, 45.5.4 and 45.5.5 above. This set of comments and other comments refer extensively to the ‘Economic Guideline’ when calling the ESS into question. Note that the authors of the ESS are the lead author and co-author of these guidelines which are more commonly known as the DEA&DP Guideline for Involving Economists in EIA Processes (see Van Zyl et al., 2005). As such, the authors of the ESS are intimately acquainted with the intention, spirit and content of the guidelines.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Financial viability 46. The financial viability of the project has not been assessed. Instead, the Economic Specialist considers that the financial viability of the project is effectively established through: 46.1. The reliance on the applicant’s own financial appraisals of the viability of the project; and 46.2. the reliance on Transnet’s tender process for a bulk fuel storage facility in the port of Cape Town and the receipt of proposals from three bidders (including the applicant).



With respect to financial viability, the ESS concludes that: “It is important to bear in mind that financial sustainability/viability is never a certainty in any commercial venture. As a rule, applicants can assess only expected risks and use these to make an informed decision. The available information gives no reason to anticipate financial failure that would argue against the project.” (see section 4.1.1 of the ESS). Given this finding, the ESS does not claim that the financial viability of the project is effectively established. Nevertheless, the revised DEIR Revision 2 contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This assessment includes further assessment of the likelihood that the proposed Burgan Oil facility will be able to achieve financial viability.

47. Neither of these bases relied upon in the Economic Specialist Report constitutes a valid basis for assessing viability (and need and desirability) in the EIA context. Economic specialists are required to independently and impartially assess the financial viability of a project. This is so even in circumstances where the applicant’s sensitive financial information may not be available.





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Issues/Comments Raised Commentator(s) Source Response from Project Team 48. The failure to adequately consider the financial viability of the project negatively impacts on the overall effectiveness of the EIA process and, in particular, the following enquiries: 48.1. The determination of whether the activity constitutes justifiable economic development (a critical component of need and desirability and sustainability enquiries) 48.2. The sustainability of the project in the EIA context, which includes a consideration of: 48.2.1. Whether the project is likely to be financially viable over the long term and whether it will be economically sustainable; and 48.2.2. whether there are risks to the long-term success of the project




49. The enquiry into the sustainability of the project cannot be satisfied without an appropriate assessment of the financial viability of the project and the sustainability enquiry is a key consideration in determining the net social welfare of the project. In this context, the Economic Specialist has failed to determine appropriately whether the project will enhance net social welfare, which is recognised as “the basic function of the economic specialist”



Repetition/reformulation of comments 46, 47 and 48. Financial viability, risk and sustainability have been considered to the appropriate degree and net welfare has been assessed. In addition, clear recommendations have been made with regard to how to best proceed with managing and mitigating impacts.

Macro-economic risks and strategic context 50. In the EIA context, economic specialists are required to assess the strategic context of the project and whether the project has the potential to cause macro-economic risks.



The revised ESS addresses socio-economic and macro-economic risks particularly associated with risks to the Chevron Refinery in Section 4.5 of the ESS report.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 51. The Economic Specialist Report considers the strategic context of the project through reference to various policies and plans relevant to the petroleum sector.61 Based on the following assumptions, the Report asserts that the project is broadly compatible with the key policies and plans: 51.1. Ports are an integral part of the petroleum industry’s logistical value chain. 51.2. The increased demand for imports has put additional strain on harbours and related activities. 51.3. The introduction of new facilities to store and distribute fuels should contribute to enhance security of supply levels in the region.64 51.4. The petroleum industry is likely to move towards structural changes that will increase the level of competition and the project presents opportunities for increased competition.



ERM and the economic specialist are in agreement with this statement.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 52. The Economic Specialist’s reliance on the above assumptions to justify the need and desirability for the Burgan facility in the strategic context does not result in an effective impact assessment of the facility at the project level, as is required in the EIA context.



Section 4.2 of the ESS dealing with ‘compatibility with key policy and planning guidance’ concludes that: “Based on the above, it seems reasonable to conclude that the proposed project is compatible with, and generally supportive of, the relevant national policies and plans. These include those related to security of supply, the maintenance of strategic stocks, infrastructural needs, spatial and capacity planning at the port and the facilitation of greater competition. However, one key area where compatibility is unclear is in respect of, ‘the promotion of local petroleum production over imports where possible’. This issue is assessed and discussed further in section 4.5 of the ESS report. As outlined in section 3.7 of the ESS, it is also important to bear in mind that the applicant will need to make a licence application to NERSA in order to be granted permission to establish the facility. As per its mandate, NERSA will then undertake an evaluation of the facility which includes the consideration of factors related to ‘need and desirability’ and policy compatibility. These include whether the facility (taking cognisance of its size, purpose and location) is economically justifiable and appropriate within the overall petroleum industry context.” The wording used in the above section is deliberate and aims to make it clear to the reader that the ESS is not ‘justifying’ anything. Instead, it outlines the policy and planning context and provides a conclusion which seems reasonable making it clear that the question of economic need and desirability or ‘justifiability’ (using NERSA terminology) will undergo further consideration by NERSA in keeping with its mandate in this regard. This will be in addition to the consideration of need and desirability in the EIA process.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 53. The Report is deficient for the following reasons: 53.1. In identifying the strategic context of the project, the Report has failed to appropriately distinguish between the national and regional context (and the unique considerations relating to the fuel sector market in the Western Cape have been ignored as a result).



53.1: Section 3.6 of the ESS dealing with the ‘The Petroleum Industry Context’ is divided into two sub-sections, one on the national context and one on the regional context. The distinction is thus clearly made. In Section 4.2 of the ESS dealing with ‘Compatibility with Key Policy and Planning Guidance’, the primary focus is on policies governing the fuels sector nationally which is considered appropriate. Western Cape considerations have not been ignored. These are addressed in Section 4.2.1 which addresses issues in Durban and Cape Town harbours to the degree possible in the context of the Liquid Fuels Energy Security Master Plan. It is recognised that regional fuels sector planning and policy is not well developed and this obviously constrains the amount of region-specific assessment that is possible in the ESS. As is pointed out in Section 4.2.1, the ESS, “Aside from the Liquid Fuels Energy Security Master Plan, the DoE is in the process of drafting a 20-year Liquid Fuels Infrastructure Roadmap. When it becomes available, this plan is expected to provide more detailed guidance on fuels infrastructure.” Section 4.2.2 of the ESS also has relevance to making regional distinctions as it deals with the Port Development Plan (PDP) for the Port of Cape Town which earmarks the entire Eastern Mole for liquid bulk in additional to storage tanks already present on the Eastern Mole. In order to assess impacts further and respond to comments, the revised DEIR Revision 2 also contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This input includes further assessment of the security of supply impacts of the project.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 53.2. The assumptions relied on in the Report are largely applicable to the national strategic context, and are not necessarily appropriate or valid in the context of the fuel sector in the Western Cape. 53.3. The Report has not considered the macro-economic risks associated with the impacts of the project and how these risks could affect the fuel sector policy objectives relied upon by the economic specialist as being critically important to the strategic policy context. In this regard, the following probable undesirable effects should have been considered as part of the socio-economic impact assessment: 53.3.1. The macro-economic risks posed to the strategic context and the fuel sector market in the event that the project adversely affects the viability of the Milnerton Refinery; 53.3.2. the effect on the security and sustainability of petroleum product supply in the event that the project adversely affects the viability of the Milnerton Refinery; 53.3.3. the effect on downstream industry associated with the fuel sector market in the event that the project adversely affects the viability of the Milnerton Refinery; and 53.3.4. the net effect on the regional economy.



53.2: See response to Comment 53.1 above. Comment 53.3. and sub-comments: All relevant considerations relating to impacts on competitors such as Chevron are dealt with to the degree appropriate in Section 4.5 of the ESS. See also response to Comment 55 below.

Assessment of impacts 54. In the EIA context, specialists are required to accurately predict and assess potential benefits and negative impacts associated with the project.66 Critically, specialists are required to address the key issues and concerns raised in scoping.



ERM agrees with the statement.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 55. The potential adverse effects of the project on the viability of the Milnerton Refinery and the fuel sector market was identified as a legitimate concern in the scoping phase, yet this has not been assessed in the Economic Specialist Report. An analysis of the effects of the project on existing facilities in the petroleum sector has been circumvented by the argument that such issues are to be more appropriately addressed by NERSA.



In the revised ESS, the potential for adverse impacts on Chevron Refinery are addressed in greater detail in section 4.5 of the report dealing with ‘Impacts on competitors’. This enhanced assessment draws on additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley) that addresses the question of impacts on the viability of Chevron’s refinery operations. This includes an assessment of the mostly likely and worst case scenarios with regard to potential imports.

56. The Economic Guideline recognises that each negative impact identified in connection with a project is required to be considered under a range of scenarios, including the worst case scenario.69 The project’s impact on the current petroleum products market and regional supply was identified as a key concern and the worst case scenario in this regard might result in the closure of the Milnerton Refinery, yet the Economic Specialist Report has not considered this at all.



See response to Comment 55.

57. Where the impacts of a project are not adequately assessed in the EIA context, then the need and desirability of the project cannot be ascertained. The role of the specialists is to evaluate all impacts in an independent and impartial manner and the need and desirability of a project is, ultimately, required to be informed by the sum of all impacts considered holistically.



In order to assess impacts further and respond to comments, the revised report contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This input includes further assessment of: • Impacts on the viability of Chevron’s refinery


will be able to achieve financial viability. • The security of supply impacts of the project. The finding of this assessment has been included in the ESS as an Appendix and integrated into the relevant sections of the ESS.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 58. Rather than undertaking an independent and considered assessment of all potential socio-economic impacts, the Economic Specialist has adopted a flawed approach to impact assessment by rather focusing on whether it is appropriate, at the level of principle, to reject the proposal in order to protect Chevron’s operations and the Milnerton Refinery from competition. The methodology utilised by the Economic Specialist has no basis in the legal requirements relating to impact assessment in terms of section 24 of NEMA.



The ESS is both independent and considered. It uses the appropriate approach for the project under assessment. This approach recognises the complexity of the economic issues associated with the project. It also does not shy away from pointing out that some level of co-operative governance is likely to be necessary between the environmental authorities and the authorities mandated with the economic regulation of the fuel sector and fuel imports in particular. In addition, to assess impacts further and respond to comments, the revised DEIR Revision 2 contains inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This input includes further assessment of: • Impacts on the viability of Chevron’s refinery



Conclusions 59. Regulation 31(2) of the EIA Regulations is determinative of the required content of EIA reports. For the reasons set out herein, the DEIR does not satisfy the prescribed requirement relating to (1) the content for environmental impact reports; and (2) the nature and scope of impact assessment in terms of NEMA.



59. The DEIR does meet the requirements of Regulation 31(2). Furthermore, the DEIR Revision 2 been updated with additional information and a specialist socio-economic study specifically to address concerns raised by stakeholders in the DEIR commenting period.

60. The DEIR is materially deficient in several respects, and most notably in connection with the failure to consider, evaluate and/or assess each potentially significant impact identified in connection with the project.



60. The DEIR Revision 2 has been updated with additional information and a specialist socio-economic study specifically to address concerns raised by stakeholders in the DEIR commenting period.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 61. The DEIR is incapable of satisfying the requirements of section 24 of the Constitution; and the National Environmental Management Principles in NEMA. Accordingly, the DEIR should be rejected by DEADP.



61. The DEIR Revision 2 has been updated with additional information and a specialist socio-economic study specifically to address concerns raised by stakeholders in the DEIR commenting period.

Comments received on the Draft EIR Revision 2:

Issues/Comments Raised Commentator(s) Source Response from Project Team Taking into consideration that the activities for the proposed Liquid Bulk Storage Facility will have an impact on the coastal zone, the applicant must consider all relevant factors stipulated under section 63 of the ICM Act which the competent authority must take into consideration. These include assessing whether the project will have impacts on coastal public property, the coastal protection zone or coastal access land. If these are affected ,the following must be considered: • The assessment of the proposed project

impacts on the coastal public property. • The potential impacts of the proposed

project on the coastal protection zone and the coastal access land.

• The applicant should provide prevention and mitigation measures, where applicable.

Andre Share Chief Director: Integrated Coastal Management Department of Environmental Affairs (Branch Oceans & Coasts) Chief Directorate: Integrated Coastal Management (ICM)

Letter dated 29 April 2014 Received via email

Potential impacts to coastal public property have been considered in the EIA process. The findings of which indicate that it is highly unlikely that there will be any potential negative impact on coastal public property as a result of the project. The development site is located within the Port of Cape Town, owned and controlled by TNPA. Potential impacts on the coastal protection zone have been considered and assessed in the EIA (see Section 6.10 and Section 8.3.6). The Project will not affect access to coastal land. Prevention and mitigation measures have been developed and stipulated in Chapter 8 and Annex K EMPr of the EIR.

The applicant must take note of section 58 of the ICM Act, considering that the proposed Liquid Bulk Storage Facility can cause negative impacts on the environment, therefore it is recommended that the proposed project must be carried out in a responsible manner.

The EIA has been undertaken for this purpose and mitigation measures carried over to the ESMP.


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Issues/Comments Raised Commentator(s) Source Response from Project Team In terms of ICM Act, anyone who wishes to discharge any effluent into the coastal water must apply to DEA for coastal waters discharge permit. If the applicant intends to discharge any influent into the coastal waters, the applicant is therefore advised to take note of Section 69 or the ICM Act For more information regarding the above-mentioned permit please contact Mr.Mulalo Tshikotshi on 021 819 2455 or via email: [email protected]

The Project will not be discharging any effluent into the coastal waters. All discharge from the facility, once having gone through the appropriate discharge management systems on site, will go directly into the municipality systems. See Section 4.10 of the EIR for a detailed description of the Project’s drainage systems.

For all materials that will be generated during the proposed Liquid Bulk Storage Facility that will need to be dumped at sea, a fully completed application form for a dumping at sea permit have to be submitted to our offices before any dumping at sea commence. In this regard, the applicant is also advised to take note of section 71 of the ICM Act. For more information regarding the abovementioned permit, please contact Miss Nokuzola Sukwana on 021 819 2446 or via email: [email protected].

The Project will not be dumping any material at sea.


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Issues/Comments Raised Commentator(s) Source Response from Project Team The following measures must be taken into consideration in order to minimize and mitigate environmental impacts that may result from the proposed liquid Bulk Storage Facility: • The proposed project has a potential of

hydrocarbon spills, the applicant must take precautionary measures to prevent any potential hydrocarbon spills on site that may be carried into the coastal waters.

• Waste generated must be properly managed in the proposed site and it must be highlighted on the EMP how will waste generated be managed, during the construction, implementation and operational phase of the proposed project.

• The proposed project will be located in close proximity to the sea; the final EIA report must include a marine study, which will assess the impacts of the project to the surrounding marine life.

• If effluent is to be discharged, an application for a coastal water discharge permit must be made before any effluent is discharged into coastal waters.

• There is a potential for waste, effluent and sewage to leach into the soil preventative measures must be made to ensure that leaching of sewage, waste and effluent is prevented.

• Precautionary measures must be in place to prepare for any unplanned events that may arise due to the implementation of the proposed development.

• Windblown particulate matter must be controlled to prevent them from entering the coastal waters.

• Prevention and mitigation measures for potential hydrocarbon spills have been developed in Section 8.1.2 and in Annex K the EMPr.

• Wastes generated by the Project will be subject to a detailed Waste Management Plan. Waste mitigation measures have been developed in Section 8.1.2, and through the phases of the Project in Annex K the EMPr of the EIR.

• The EIR has addressed the potential impacts on marine life in Sections 6.10, 8.3.6 and in Annex K the EMPr of the EIR.

• Noted. No effluent will be discharged into coastal waters. • Measures to prevent waste, sewage and effluent from leaching

into the soil have been developed and are discussed in Section 4.10, 8.1.2 and in Annex K the EMPr of the EIR.

• Precautionary measures have been developed for unplanned events, which are discussed in Section 8.3 and in Annex K the EMPr of the EIR, including the development and implementation o fa Spill Response Plan and an the updating of the Emergency Response Plan.

• Mitigation measures for windblown particulate matter have been developed and are discussed in Section 8.1.1 and in Annex K the EMPr of the EIR.


39

Issues/Comments Raised Commentator(s) Source Response from Project Team In terms of Regulation 6 of the National Environmental Management Act: Control of use of vehicles in the coastal zone (GN Regulation 1399 of 21 December 2001), any person intending to drive on the coastal zone should lodge an application for a vehicle access permit to the department of Environmental Affairs (Oceans and Coasts), before driving on the coastal zone.

All driving will take place on public roads to the Port of Cape Town, and within the Port of Cape Town on designated roads.

We confirm that we are preparing further comments on behalf of our client. We are striving to meet the deadline of 1 August and will endeavour to do so. However, our client has been required to engage with its own industry specialist to engage on some of the information in the revised DEIR and the commenting timeframe is quite tight. We would like to request and extension to the commenting period until 6 August, although as indicated above we are striving to try and meet the 1 August deadline.


Email 30 July 2014 An extension was agreed to by Burgan Oil and a stakeholder notification was sent to I&APs informing I&APs of the extension to the commenting period.

The construction activities must be managed in accordance with the National Dust Control Regulations R. 827 dated 01 November 2013 promulgated in terms of the National Environmental Management: Air Quality Act, 2004 stipulated.

Phumela Hoza for the Executive Director: City Health City of Cape Town

Letter dated 31 July 2014

This requirement has been incorporated into the EMPr in Annex K of the EIR.

In this regard a comprehensive Dust Management Plan must be developed and included in the Environmental Management Plan.

This requirement has been added to the EMPr in Annex K of the EIR. A specific Dust Management Plan will be developed under the EMPr as one of the required subplans.

Once the facility has been fully commissioned a Fence line Passive Survey Monitoring Program must be undertaken to validate the findings of the dispersion model.

This requirement has been added to Section 8.1.1 and the EMPr in Annex K of the EIR.


40

Issues/Comments Raised Commentator(s) Source Response from Project Team The City of Cape Town is the licensing authority for the licensing of listed activities, in terms of NEM: AQA, 2004

Noted. An Atmospheric Emission Licence will be applied for separately by the applicant for permission for activities which it wishes to undertake and which are listed in terms of NEM: AQA, 2004.

Should the applicant intend installing any fuel burning equipment as defined in terms of the City of Cape Town Air Quality Management By-Law, no 6772, 30 July 2010, the application for installation for such equipment must be submitted to the Air Quality Management Department. All correspondence or inquiries in this regard can be directed to Ms Phumela Hoza

Noted. There will be no fuel burning equipment installed for the Project.

We refer to the Air Quality Specialist Report Section 3.4 Health Risk guideline discussion. We are concerned that the potential cumulative impact of the proposed facility and those from the adjacent existing fuel storage facility have not been considered in this Study. In this regard please provide an Assessment of the cumulative impacts assessed against the RSA ambient air quality standard for Benzene and the cancer risk guidelines.

A recent environmental assessment, including in terms of air quality was undertaken by WSP Consultants on the FFS Refiners site. The findings of which have been incorporated in the analysis of potential cumulative impacts on air quality in Section 8.5.2 of the EIR. Findings of the FFS Refiners assessment were: ‘The only current South African ambient standard for hydrocarbons is the annual ambient limit value for benzene, set at 5µg/m3, plus the margin of tolerance (+5µg/m3) (which results in a target figure of 10 µg/m3). The concentrations at the harbour site were well within this threshold at 0.66 and 3.05µg/m3 at the two monitoring locations. The recorded values in the case of benzene show that the site is compliant with the annual ambient Limit Value as proposed in SANS1929:2005. The other VOC results were all considered low and thus do not pose a threat to human health nor to the surrounding environment.’ Therefore given the data recorded for the FFS Refiners site itself indicating a low potential impact on air quality, with the low potential impact on air quality as a result of the Burgan Oil facility and that the Port of Cape Town is already an industrial facility with bulk oil and duel storage, the addition of the Project is unlikely to have significant cumulative impacts on air quality or human health risks. Additionally, a fence line monitoring programme has been stipulated in the EMPr (Annex K) of the EIR.

The Executive Director: City Health reserves the right to call for any further requirements should the need arise.

Noted.


41

Issues/Comments Raised Commentator(s) Source Response from Project Team The case above has been forwarded to me and after a quick scan of the documents; I do not see where the proposed development triggers the National Heritage Resources Act in terms of underwater cultural heritage. I see that in January HWC said that they felt that no HIA was necessary and from what I have read so far, the development is all land-based. Is there something specific that should be for the Maritime and Underwater Cultural Heritage Unit's attention?

Ms. Sophie Winton Heritage Officer: Maritime and Underwater Cultural Heritage Unit South African Heritage Resources Agency

Email 01 August 2014

The proposed Project is entirely land-based, and there is nothing specific for the Maritime and Underwater Cultural Heritage Unit’s attention.

Firstly please note – our company is called FFS Refiners (Pty) Ltd and NOT Fuel Firing Systems as the report states.

Neil Yelland General Manager - Operations FFS Refiners (Pty) Ltd


ERM appreciates the clarification. The EIR has been changed to reflect ‘FFS Refiners (Pty) Ltd’.

The document states: “Burgan Oil has recently signed a contract for the terminal to be supplied by an above ground 10 inch pipeline, approximately 900m in length, operating at about 6 bar pressure (the pipeline is designed for a pressure of 15 bar) connected to the main import pipeline servicing the Joint Bunkering Services (JBS) from the Chevron Refinery. The terminal can also be supplied by ship from the Eastern Mole Berth 2 located adjacent to the FFS site. While the jetty will be operated by Burgan Oil, all fire protection for the jetty will be the responsibility of TNPA.” • Kindly advise whether or not the proposed

path of the 10” line will interfere with the maintenance requirements of the FFS 20” line. If so, what is Burgan’s proposed plan of action to mitigate against such interference?

• The above statement implies that Burgan will be operating the EM2 berth – do they mean they will operate it for their own vessels as FFS currently does or will Burgan be doing the operation for all discharges?

• The new 10 inch pipeline that will connect the Burgan Oil terminal with the current infrastructure will run through the new culverts that TNPA is due to construct and make available through the current TNPA upgrade project. Burgan Oil has had a workshop with TNPA to explain this issue and given TNPA the dimensions and locations of the pipeline. It is not envisaged that the proposed path of the 10 inch pipeline will interfere with the maintenance requirements of the FFS Refiners 20 inch pipeline.

• Burgan Oil will operate the EM2 berth for Burgan Oil customers. The infrastructure that will be placed at be EM2 berth will be under control of Burgan Oil.


42

Issues/Comments Raised Commentator(s) Source Response from Project Team The DEIR states that TNPA have relaxed the Transnet code for tank spacing and have agreed to Burgan building to SANS10089, thereby increasing the tank farm capacity to 118 000 m3. On what grounds did Transnet grant the relaxation without compromising the original intention of the Transnet code?

It is not Burgan Oil’s view that TNPA has relaxed the TNPA standard. Burgan Oil agreed with TNPA that Burgan Oil will use the SANS code with additional mitigations in order to be compliant to the TNPA requirements.

The document states: “These two trial pits are located on the inside edge of the two Burgan Oil land portions, adjacent to the FFS Refiners site, suggesting a possible relationship between the FFS Refiners facility and the MAHs in the soil.” FFS Refiners strongly objects to such careless conclusions being drawn without consultation for a site that has been reclaimed through used rubble material. We wish to place on record that FFS Refiners have not operated on the land occupied by Burgan and have a spotless record in terms of spills and environmental compliance at its Cape Town Harbour Tank Farm facility.

ERM apologies and regrets the statement without consultation. The statement has been removed from the EIR and specialist report.

The air quality impact assessment did not use FFS Refiners as an “on‐site sensitive receptor”. Kindly forward a detailed report specifically highlighting the effect of dusts and VOC’s on FFS employees operating the current tank farm.

A specialist Air Quality Impact Assessment was undertaken as part of the EIA process, and is available with the EIR as Annex F. Also see response above regarding the analysis of potential cumulative impacts on the air quality in the Port of Cape Town, as detailed in Section 8.5.2 of the EIR.

MHI Kindly forward the specific report detailing the effects of MHI events on the storage tanks in FFS’s diesel storage facility as well as its employees.

Section 8.2, 9.2 and 10 of the Quantitative Risk Assessment (Annex H of the EIR) deal with escalation effects as well as surrounding MHI’s. Section 8 deals with risk to individuals off site. These sections now mention FFS Refiners (Pty) Ltd specifically.

MHI ‐ It appears that the MHI has not taken into consideration the new FFS tank farm to the NE of the current diesel storage facility. Kindly confirm or revise.

The Quantitative Risk Assessment (Annex H of the EIR) images now include FFS Refiners (Pty) Ltd developments. A Google Earth GIS image (clearer than the regular satellite images) was used, which is older and does not reflect new FFS Refiners (Pty) Ltd bulk storage area. The images that have now been used in the QRA reflect this. Amendments were also made to the population sizes to accurately capture the size of the bunds. The majority of the site size was accounted for but is now more accurate.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Social disturbance – The report indicates petty theft to local enterprises. The local enterprises implied are FFS Refiners. As a hydrocarbons storage depot on the Eastern Mole, we abide by strict security codes. We therefore do not find Burgan’s commitment in mitigation of this risk sufficient and request Burgan to submit an acceptable security arrangement for review.

Burgan Oil intends installing high levels of security, as 3rd party products will be on site, including CCTV systems and fencing. Burgan Cape Terminals will seek to undertake a formal meeting with FFS Refiners to explain the plans and designs. Burgan Oil will provide the requested information to FFS Refiners directly.

The section in the Final EIAR on potential impacts of unplanned events has also now included the potential impact on marine fauna. Burgan Oil's Emergency Response Plan (ERP) is being updated in response to the Quantitative Risk Assessment and will include an oil spill contingency plan, making reference to the Department of Environmental Affairs: Oceans and Coasts oil spill contingency plans and TNPA oil spill emergency response plans, which should address our concerns. CapeNature additionally recommends that the ERP must include, among other stakeholders, CapeNature and SANCCOB (Southern African Foundation for the Conservation of Coastal Birds) as key stakeholders to be contacted as soon as possible in the case of an unplanned event occurring which could impact on avifauna. While such an unplanned event could result in a significant impact, CapeNature is satisfied that the risk is sufficiently low and sufficient measures have been put in place to prevent an event occurring and to react and remediate in such a case.

Rhett Smart CapeNature


The requirement that CapeNature and SANCCOB (Southern African Foundation for the Conservation of Coastal Birds) as key stakeholders be contacted as soon as possible in the case of an unplanned event has been included in Annex K the EMPr.

Please note a nil response from the Department Jan Du Plessis Western Cape Provincial Government: Transport and Public Works


Noted.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 1. We act for Chevron South Africa (Pty) Ltd (“Chevron”).


Letter dated 6 August 2014

Noted.

2. This letter contains comments, on behalf of our client, on the revised Draft Environmental Impact Report dated July 2014 (the “DEIR”) prepared by ERM for the “Proposed Liquid Bulk Storage Facility” in terms of the EIA Regulations promulgated under the National Environmental Management Act 107 of 1998 (“NEMA”).

Noted.

3. The primary purpose of these comments is not to repeat the previous comments contained in our letter dated 5 May 2014, but rather to focus on the Fuel Sector Report prepared by Mr. Paul Buley (the “Fuel Sector Specialist Report” or “FSSR”), and the Economic Specialist Report (insofar as it has been amended to incorporate the findings of the FSSR). The submissions contained in the DEIR will also be responded to, to the extent that this deals with the issues in the FSSR.

Noted.

4. In our previous comments we had raised several concerns, on behalf of our client, regarding the extent of the impact analysis and assessment, particularly in relation to the assessment of socio-economic impacts. The purpose of these comments is to determine the extent to which the concerns previously raised have been addressed appropriately.

Noted.


45

Issues/Comments Raised Commentator(s) Source Response from Project Team 5. With regard to the requirement to identify and evaluate all potential project-related impacts and the concerns raised in connection with the extent of assessment undertaken to date, ERM’s position is that the DEIR “assesses the potential socio- economic impacts to an appropriate level” ERM asserts further that “the impact assessment focused on providing the authorities with sufficient information to understand the impacts associated with the project and to make a decision whether or not to approve the application”.

This remains ERM’s position. The Economic Specialist Study has considered relevant impacts and has done so to the level of detail appropriate to satisfy the requirements of the relevant legislation in order to provide adequate information on impacts. In order to assess impacts further and respond to comments, the revised report also contains additional inputs from a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This input includes further assessment of: • Impacts on the viability of Chevron’s refinery operations. • The likelihood that the proposed Burgan facility will be able to

achieve financial viability. • The security of supply impacts of the project. Mr Paul Buley’s study is included in Annex I of the Economic Specialist Study.

6. This goes to the heart of Chevron’s concerns with the project, namely that the DEIR does not provide the competent authority with sufficient information to understand the nature and scale of anticipated impacts, or the significance thereof.

The EIA process thus far has identified and assessed the potential impacts to the degree required in order to provide the competent authority with sufficient information to understand the nature and scale of potential impacts and the significance thereof. This includes an open and transparent public participation process.

7. ERM’s position, in response to this concern, is that: 7.1. The DEIR and the Economic Specialist Report have identified and assessed “a number of impacts” 7.2. The “socio-economic impacts” of the project have been assessed “in more detail” in the “additional economic study” undertaken by an industry specialist and reported on in the FSSR. 7.3. The FSSR “specifically addresses the socio-economic impacts of the project on the Chevron Refinery”.

7.1 This is correct. 7.2 This is correct. In response to Chevron’s previous concerns raised an additional study was undertaken by a specialist focusing exclusively on the liquid fuels sector (Mr Paul Buley). This input includes further assessment of: • Impacts on the viability of Chevron’s refinery operations. • The likelihood that the proposed Burgan facility will be able to

achieve financial viability. • The security of supply impacts of the project. 7.3 This is correct.


46

Issues/Comments Raised Commentator(s) Source Response from Project Team 8. For the reasons stated in our letter dated 5 May 2014, we do not agree with the contention that the first drafts of the DEIR or the Economic Specialist Report have appropriately identified, considered and evaluated all potential positive and negative impacts associated with the project. For the reasons stated herein, we do not agree with the contention that the current revised draft of the DEIR (and specialist reports) have addressed the requirement to assess socio-economic impacts. The latest revision has not resolved Chevron’s concerns as the impact assessment is materially deficient in several respects.

Chevron’s position is noted.

9. On the substance of the FSSR, in particular, Chevron has the following concerns with the veracity of some of the findings and conclusions in the FSSR, which ultimately go to the heart of Chevron’s concerns with the level of analysis undertaken in the EIA process. These include: 9.1. The accuracy of the supply and demand analysis contained in the FSSR. 9.2. The accuracy of the prediction regarding the nature, extent and severity of impacts on the profitability and viability of the Chevron refinery. 9.3. The extent to which infrastructural constraints and policy imperatives around strategic stocks can be relied upon as a determining factor in motivation of the application.

9.1 Noted. 9.2 Noted. 9.3 Noted.


47

Issues/Comments Raised Commentator(s) Source Response from Project Team 10. Whilst the FSSR evidences an attempt to provide more relevant information in connection with the project (which was previously absent from the DEIR) the information is insufficient insofar as it fails to provide a comprehensive understanding of the impacts associated with the project. Accordingly, we do not agree with the contention that sufficient information has been provided to the decision-maker to enable a considered and defensible decision on whether or not to approve the application.

The FSSR undertakes an economic assessment to the detailed level required to provide a comprehensive understanding of the impacts associated with the project. Chevron’s position is noted.

11. It is clear from an evaluation of the FSSR, that whilst inroads have been made to analysing the fuel sector supply market, the FSSR does not equate to a socio- economic impact assessment as alluded to by ERM. Nor does the FSSR have the effect of addressing each of the concerns raised in our previous comments. Whilst offering critical industry insights into the fuel sector market, Paul Buley is not qualified as a specialist in the field of socio-economic impact assessment. We are not questioning the author’s industry knowledge and experience, but it is something entirely different to suggest, as ERM does, that Mr. Buley is qualified to undertake an impact assessment for the purposes of the NEMA EIA Regulations.

The DEIR does not state nor allude that the FSSR is a socio-economic impact assessment. The DEIR and this FEIR states that the FSSR is an ‘industry specialist report’ which has been used as additional input into the Economic Specialist Study (ESS) to establish if these is indeed any economic impact on Chevron Refinery which in turn may result in socio-economic impacts. Paul Buley has not been used in the role of ‘socio-economic impact assessment’ specialist. Paul Buley has fulfilled the role of ‘Industry Specialist’ to establish if there is an economic impact on the refinery Paul Buley’s industry specialist report (the FSSR) has been used as input into the ESS, which has been undertaken by Dr Hugo Van Zyl, who was a key author for the guidelines on the incorporation of economic impact assessments in the EIA process under the NEMA EIA Regulations.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Burgan Oil response to 11, 14 and 15:

It was never suggested that Mr. Buley is a specialist in socio-economics. He is a highly credited oil industry specialist with an illustrious 33 year career in Chevron of which 7 years as the General Manager of the refinery. He still has good professional relationship with Chevron. Upon retirement Mr. Buley has assisted in conducting numerous studies related to oil supply/demand and oil infrastructure in South Africa and in the Western Cape for; a) Chevron b) FSSTT Government and Oil Industry in 2006 c) PetroSA d) The Energy Security Master Plan for Liquid Fuels. In addition to numerous other roles, Mr. Buley also was a part of the advisory committee of Burgan whose role was to give independent advice to the Board of Directors of Burgan. Due to his enormous knowledge of the fuel sector (in which there are very few specialists of Mr. Buley's stature) and that he is independent (with no current interest in either Chevron or Burgan) Burgan considered him to be the most appropriate person to conduct this Specialist Study. Mr. Buley’s role was only to conduct the study on the supply and demand balance scenario in reference to Burgan project and its impact to the Chevron refinery and not to conduct the socio-economic study. Dr. Hugo van Zyl and Prof. Anthony Leiman used Mr. Buley’s study to analyze the socio-economic impact on his findings.


49

Issues/Comments Raised Commentator(s) Source Response from Project Team It's critical to note that Dr. Hugo a PhD holder in economics from

the University of Cape Town has sixteen years’ experience focusing on the analysis of projects and policies with significant environmental and development implications and has contributed specialist input to over 60 environmental assessments. He is also the lead author of the Western Cape Department of Environmental Affairs and Development Planning guidelines on economic specialist input into EIAs. Prof. Leiman is an associate professor in the School of Economics at the University of Cape Town. He has taught on, and carried out prior project appraisals in, the petroleum sector, mainly using cost-benefit analysis, and has extensive experience in environment resource economics. He is also a co-author with Dr. Hugo of the Western Cape Department of Environmental Affairs and Development Planning guidelines on economic specialist input into EIAs.

12. The analysis in the FSSR is flawed in several respects. It follows that the Economic Specialist Report is similarly flawed as it relies upon the findings of the FSSR for the purposes of assessing the socio-economic impacts.

Chevron’s position is noted. However the stakeholder’s comments do not provide specifics or detail as to how, why or in what specific respects the analysis of the FSSR is flawed.


50

Issues/Comments Raised Commentator(s) Source Response from Project Team 13. In order to ensure that Chevron’s concerns are appropriately contextualised and taken into account in the EIA process, Chevron has enlisted the assistance of its own industry expert in order to undertake an appraisal of the key aspects underlying the motivation for the proposed Burgan terminal. The results of this are contained in a report prepared by Mr. Robert Stewart of PetroLogistics (the “PetroLogistics Report”). The purpose of this report is to ensure that Chevron’s concerns with the EIA process are appropriately contextualised based on an independent analysis of the assumptions and conclusions in the FSSR. A copy of the PetroLogistics Report is attached hereto marked Annexure “A” and should be read together with these comments.

The approach applied by Paul Buley in analysing the impact of Burgan Oil importing the full 805 Mlpa was to deduct the import requirements the Chevron Refinery would need to satisfy the market demand from the time the Burgan Oil facility was operational. This is the approach advocated by Paul Buley as the impact of the full 805 Mlpa requiring the Chevron Refinery to shut in capacity is, as has been pointed out, greater than that included in the FSSR. According to Paul Buley the impact on the Chevron Refinery can be calculated in one of two ways: 1. Assume the Chevron Refinery does not reduce the crude rate

and exports the 805 Mlpa up the coast and thus incurs shipping costs

2. Assume the Chevron Refinery shuts in the crude rate so that supply = demand less 805 Mlpa

The FSSR analysis used the first approach, as from Paul Buley’s estimate of Chevron Refinery’s fixed cost of somewhere between $70 million and $100 million, it would be more favourable to place the surplus product up the coast, indeed the information provided by Chevron Refinery to Hugo van Zyl indicated that this was Chevron Refinery’s preferred operating plan. For these reasons Paul Buley quantified the impact using the fist method. Paul Buley disagrees with the Petrologistics calculation of the financial loss due to the reduced throughput as it is not based on the crudes currently run by the Chevron Refinery. The use of these crudes in the calculations results in a much greater reduction in crude and hence the fixed cost contribution of the Chevron Refinery due to the lower crude is greater. Paul Buley’s calculated financial loss for shutting in Chevron Refinery’s crude rate from 27.9 to 21.7 million barrels per year to reduce the production by 805 Mlpa is about $22 million per year. The financial loss is related to the yield of distillate products from a barrel of crude and the higher the yield the lower the cost. Chevron Refinery currently runs light WA crudes and not Dubai crudes, on which the Petrologistics cost was calculated.


51

Issues/Comments Raised Commentator(s) Source Response from Project Team The Petrologistics report is explicit in that the 805 Mlpa reduced

fuel product production will always result in a decreased crude rate 10 years into the future. In Paul Buley’s discussion with Chevron Refinery in May 2014, the matter of the crude rate was discussed and Chevron Refinery stated that it is close to approaching runs of 100 000 bpsd. At a capped permitted capacity of 100 000 bpsd, allowing for scheduled and unscheduled shutdowns and slowdowns Chevron Refinery can in Paul Buley’s experience at likely maximum process 27.9 million barrels of crude per year. This was the basis for the FSSR supply demand balances which show Chevron Refinery will need to import product going into the future. Chevron Refinery has applied to have its licence increased from the approved 100 000 to 115 000 bpsd which is their nameplate capacity of 65 000 plus 50 000 bpsd. It is the inclusion of the additional 15 000 bpsd of capacity that is required to support the assertions made by Petrologistics.


52

Issues/Comments Raised Commentator(s) Source Response from Project Team Burgan Oil response to 13, Annex A, 17.3, 20, 31, 32, 33, 34, 38.4,

49, 53, 60, 61: a) Burgan’s Specialist Report shows that Mr. Buley has

considered the data provided by Chevron and challenges its integrity based on the numerous authorities’ forecasts and views that are not aligned with its projection i.e. SARS (South Africa Revenue Service), Transnet and NAAMSA (National Association of Automobile Manufacturers of South Africa). In addition to incorporating the above authorities views Mr. Buley in his analysis has also incorporated findings from major strategies and papers made by the governing authorities in this matter, such as the Moerane Commission (2005), Fuel Supply Strategy Task Team (2006), White Paper on Energy Policy (2008), Emergency Supply Management Plan (2008), Strategic Stocks Draft Policy (2013). In contrary the PetroLogistics report does not provide any projections on the demand beyond 2013.

b) PetroLogistics has used a refinery margin analysis based on a

hypothetical refinery in Singapore and not the actual Chevron refinery itself. As mentioned above the use of different crudes inflates the calculation of Chevron refinery’s fixed costs. Burgan is not sure if such analysis will reflect the actual impact faced by Chevron, especially in its claim that the refineries profit of USD 42 million per year will be reduced to USD 18 million per year due to Burgan project.

c) The terminal capacity assumption made by PetroLogistics is

inaccurate as it does not incorporate technical, operational and safety constraints. Criteria such as number or road truck loading bay, pumping capacity, storage capacity allocated for respective product grades, size and frequency of parcel received by oil marketer via pipeline and or vessels and number of trucks loading per day must be included in the calculation to arrive at the terminal’s maximum operable capacity. In addition sufficient buffer will need to be incorporated to factor planned and unplanned maintenance.


53

Issues/Comments Raised Commentator(s) Source Response from Project Team 14. Without questioning the integrity and experience of the author of the FSSR, Chevron is concerned that the author of the FSSR appears to have had a direct role historically in advising the applicant in connection with the project. The independence of the consultant is called into question pending an explanation from the Environmental Assessment Practitioner regarding the precise nature of the relationship between the author and the applicant.

As stated earlier, Mr. Buley was a part of the advisory committee of Burgan whose role was to give independent advice to the Board of Directors of Burgan. Paul Buley in this EIA process has acted as an independent specialist to ERM on the fuel industry. Please note that all specialists in this EIA process have signed the required specialist’s declaration of independence.

15. In this regard, and in support of this concern, we attach hereto a presentation prepared on behalf of Burgan Oil marked Annexure “B”. On page 10 of that presentation, it indicates that the author of the FSSR has served previously in an advisory capacity for the applicant in connection with this project. We therefore request that the precise relationship between the applicant and the author of the FSSR be clarified to avoid any misunderstandings and a potential conflict of interest.

See response above to 11 and 14.

16. Whilst the inclusion of a dedicated fuel sector report in the EIA process is welcomed, Chevron has several concerns about the accuracy of certain assumptions and conclusions in the FSSR, which concerns are described in detail below.

Chevron’s concern is noted. The stakeholder comments below do not specify what exact assumptions are incorrect nor how or why the assumptions of the FSSR are incorrect, nor how these assumptions could be improved upon.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 17. The primary issues of concern with the DEIR (and the specialist reports) include the following: 17.1. There is insufficient information regarding the “multi-purpose” nature of the Burgan terminal to enable stakeholders (including the competent authority) to appropriately consider the range of potential uses of the facility and, therefore, the range of impacts associated with the potential uses inherent in a multi-purpose facility.

17.2. Related to the above point, there is insufficient information regarding the extent to which the proposed facility will result in the import of significant volumes of petroleum products into the Cape Town market or the potential for such import to occur. 17.3. The analysis of the supply and demand side of the fuel sector market in Cape Town is based on several flawed assumptions and considerations, with the result that the projected supply and demand balance provided in the FSSR is inaccurate. 17.4. The importation of significant volumes of product into the market ahead of local production could have significant adverse consequences for the Chevron refinery. The nature and scale of such impacts provided in the FSSR are grossly understated.

17.1 as described in detail in Chapter 4 of the EIR, the proposed facility would be used for the storage of fuel products, and would enable the import and export of fuel products and distribution of those products. The storage capacity of the facility has been quantified and would have a total nominal tank capacity of approximately 118,000m3. The maximum expected product throughput for possible imports/exports has also been quantified at 805,000m3/yr. A detailed project description, including this information, is found in Chapter 4 of the EIR. 17.2 As stated above the EIR states ‘The maximum expected product throughput is 805,000m3/yr.’ The potential import volumes and flow rates of the facility are detailed in Chapter 4 of the EIR. 17.3 Chevron’s position is noted. However, the stakeholder comments do not specify what exact assumptions are incorrect, how or why the assumptions are incorrect, nor how these assumptions could be improved upon. 17.4 Chevron’s position is noted. The potential significance of the impact on the Chevron Refinery from the importation of fuel products has been assessed in detail in the ESS and FSSR and integrated into the Final EIR in Section 8.2.6.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Chevron comment provided in 17.1, 18, 58, 59 have been summarised below with a response in the response column. There is insufficient information regarding the “multi-purpose” nature of the Burgan project. Burgan’s proposed petroleum product storage and distribution facility in Eastern Mole will result in existing and or new oil marketers (Burgan’s customers) to import refined petroleum products to supply the demand in Cape Town.

Burgan Oil Response to 17.1, 18, 58, 59: Burgan's oil storage and distribution terminal will provide oil storage and distribution services to customers (oil marketers) in Western Cape. The terminal will have access to receive refined oil via pipeline from the Chevron refinery and sea going vessels (including from the Durban refineries, Enref and Sapref) and will distribute it via road trucks. Oil marketers in Cape Town currently purchase refined oil products from Chevron’s refinery and distribute them to their respective retail/wholesale outlets. Due to shortages of supply from the Chevron refinery from time to time, the oil marketers also import their required fuel through the Chevron refinery. Burgan does not know what the business models of its customers, the oil marketers, will be. In response to comments made by Chevron in response to the draft EIA (which comments were not specifically raised earlier in the EIA process) Burgan commissioned an independent study on the oil market supply and demand in Western Cape to analyse the current and future of the oil business in detail (“Specialist Study”). The report in summary indicates: a) Oil imports have increased due to shortage of supply and forecasts that the imports by oil marketers will increase due to increase in demand. b) Unfavorable economics of importation make it cheaper for oil marketers to purchase from Chevron’s refinery unless there is insufficient volume of refined petroleum products available locally.


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Issues/Comments Raised Commentator(s) Source Response from Project Team In addition to the above Specialist Study, Burgan's anchor tenant,

a reputable major oil marketer with more than 30 years of operations in South Africa has indicated the need to continue to purchase from Chevron instead of importing unless necessary. Other oil marketers approached by Burgan also indicated their strong need for the storage and distribution terminal as it also provides them with additional storage capacity, bio fuels storage and road truck loading gantry. The currently capacity for those service in the Western Cape, especially near Cape Town a high demand centre, are inadequate.

Chevron comments provided in 17.2, 17.4, 19, 23, 24, 25, 26, 27, 29, 30, 35, 36, 37, 38, 39, 40, 41, Annex c, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 54, 55, 56, 57, 60, 61 have been summarised below and responded to in the response column: Oil marketers preference to import than buying directly from Chevron will result in Chevron’s sales to reduce significantly and impact its financial viability and thus resulting in the refinery to be closed and cause significant economic impact

Burgan Oil response to 17.2, 17.4, 19, 23, 24, 25, 26, 27, 29, 30, 35, 36, 37, 38, 39, 40, 41, Annex c, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 54, 55, 56, 57, 60, 61: Burgan’s Specialist Study indicated that Burgan’s customers (oil marketers) might import refined petroleum products for two possible reasons: 1) If availability of local fuel supply is in shortage The fact that: a) imports currently occur via Chevron’s facility by oil marketers; b) the supply and demand projection by the government of SA indicating a shortage of fuel supply; and c) the introduction of Clean Fuels 2 shows that imports will continue and increase in future to meet the increasing demand 2) If the economics of importing fuels is better than securing locally produced refined fuel. Apart from the above, importation only occurs when it is economically feasible. The existing scenario where oil marketers buy fuel from Chevron even with available access to imports supports the view that oil marketers would rather buy fuel from Chevron than import it.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Most critically, the Specialist Study also indicated that there are

sufficient government policies, guidelines and regulations in place to control and regulate rampant importing of oil marketers for short term gains. These were referenced in the Specialist study, but for the sake of completeness we reiterate them more fully: The fuel price is tightly regulated by the Working Rules for Determining the Basic Fuel Price issued by the Department of Energy in 2003 and revised in 2008. It is therefore not possible for speculators to import fuel with a view to making extraordinary products in the way that is with other commodities. Further, the importation of Fuel is strictly regulated under the International Trade Administration Act 71 of 2002, the Petroleum Products Act and Guidelines Governing the Recommendations by the Department of Minerals and Energy to the International Trade Administration Commission ("ITAC") in Respect of the Importation and Exportation of Crude Oil, Petroleum Products and Blending Components, published in GN 1069 in Government Gazette 29328 of 3 November 2006 ("Guidelines"). Import permits are only lawfully issued by ITAC on the recommendation of the Department of Energy ("DoE") with reference to the Guidelines. The Guidelines do not permit such a recommendation by the DoE where that will conflict with the objectives of the Petroleum Products Act which include the regulation of the Petroleum industry. It is highly unlikely that the DoE would issue recommendations that would have the effect of closing the Chevron Refinery.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 17.5. There is insufficient basis to assess the merits of the application in terms of compatibility with government policy objectives. The EIA documentation selectively focuses on national policy objectives which support infrastructure investment at a high level without due regard to the unique context of the Cape Town fuel sector market or whether an intervention is required in the Cape Town market to address a particular concern identified in policy. The EAP has responded by indicating that whilst “the primary focus is on policies governing the fuel sector nationally… “Western Cape considerations have not been ignored. These are addressed in Section 4.2.1 which addresses issues in Durban and Cape Town harbours to the degree possible in the Liquid and Fuels Energy Security Master Plan” The PetroLogistics Report explains the applicability of these high level policy objectives to the Cape Town context.

17.5 The EIA considers the national policy objective, however, it also fully considers the local Cape Town fuel sector market conditions through the additional industry specialist study undertaken (the FSSR) as well as the ESS.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Burgan Oil response to 17.5, 17.7, 26, 27, 57:

Burgan does not dispute that state authorities charged with environmental management and energy generation and distribution have concurrently jurisdiction over the authorisations needed to construct and operate an oil terminal. ERM determined that there will be no direct adverse socio-economic impacts as a result of the construction of the proposed facility if it proceeds. In response to the comments raised by Chevron regarding alleged socio-economic impacts if the refinery closes down because of the project, Mr. Buley was commissioned to consider the likelihood of that and so to enable the supplementation of the economic report where needed. When NERSA considers any application it will need to take into account the findings of the EIA and all the considerations imposed on it by its enabling legislation.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 17.6. The consideration of the need for the facility has been undertaken without due consideration of the policy imperative to support and protect local refining production ahead of imports. Whilst the need and desirability section in the DEIR has been updated, there has not been an assessment of need and desirability in relation to all identified project impacts. As a result of the flaws in the FSSR, there has been no accurate assessment of need and desirability in relation to the real potential negative impact that the facility could have on the Chevron refinery and the regional economy.

17.6 The EIR has taken into consideration the relevant policies governing the fuel sector of South Africa in the analysis of Need and Desirability, including policy that seeks to regulate importation and protect local refining of fuel product (see Section 2.2.8 of the EIR) – ‘The Department of Energy (DoE) is the key regulatory authority that governs fuel imports. This is done primarily through an import licencing process in which any party wishing to import fuel is obligated to first enquire whether other local fuel producers have stock available in the country. The DoE then has the opportunity to assess the situation and tends to only grant permission to import once it can be confirmed that stock is not available locally. As per DoE policy, “The import of refined products is restricted to special cases where local producers cannot meet demand. It is subject to state control to promote local refinery utilisation.”’ In determining need and desirability the policy governing imports and protecting local refining, adjudicated on a case by case basis by the DoE, must also be put in context with policy developed to protect the security of supply for South Africa, and Cape Town. Note that the facility would serve as a bulk fuel storage facility and not only enable the importation of fuel. An assessment of need and desirability in relation to all identified project impacts has been undertaken in Chapter 9 at the conclusion of the EIA where the overall benefits and costs of all identified impacts are assessed and considered in the overall context of need and desirability of the Project. The ESS clearly addresses this policy imperative among other imperatives. In its concluding discussion in the section dealing with compatibility with key policy imperatives it states that “However, one key area where compatibility is unclear is in respect of, ‘the promotion of local petroleum production over imports where possible’ as per DoE fuel security of supply planning guidance.” In addition to merely recognizing this imperative, the study goes further by assessing impacts on local petroleum producers in the form of Chevron. Also see the response on page 56 above regarding the legal controls on imports that may adversely affect Chevron.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 17.7 The EIA documentation continues to reflect an overwhelming bias in the impact assessment towards the promotion of competition as a generally desired state of affairs or objective in terms of generally applicable economic principles, rather than a considered assessment and identification of all potential consequences of the project. Section 4.5 of the Economic Specialist Report deals with “Impacts on Competitors” which implies that Chevron’s concerns are being viewed exclusively through the prism of competition. This in itself is inappropriate and deflects from the legitimate concerns Chevron has raised about the potential consequences of the Burgan terminal to be fully considered, evaluated and assessed as part of the EIA process. There is no recognition in the DEIR that the fuel sector is regulated given its strategic importance.

The EIA and ESS state that “While it is recognised that greater competition is not desirable in every situation, it is generally accepted that the onus is on those who argue against competition to, (1) comprehensively prove the merits of their case and (2) show that a given course of action or policy intervention to restrict competition would better serve to limit the negative impacts or un-intended consequences of a development. Notwithstanding the unique structure of the petroleum industry, attempts to restrict competition thus need to be treated with caution both conceptually and with reference to the mechanism through which competition is to be restricted, if at all.”

The EIA and ESS recognises the perils of restricting competition without good reason (and the legislation governing competition in the South Africa). The ESS considers competition carefully and objectively and concludes that the project has merit in terms of increasing opportunities for competition. It then contributes to the overall assessment of the need and desirability of the project by investigating its compatibility with relevant policy. Note that the potential socio-economic impacts that are in question would be as a result of the importation of fuel. In response to “There is no recognition in the DEIR that the fuel sector is regulated given its strategic importance” – the DEIR deals in detail with the regulatory framework of the fuel sector in South Africa, notably Chapter 2 of the DEIR, but also throughout the economic specialist reports and DEIR. The Economic Specialist Study and associated Fuels Sector Specialist Report goes out of its way to identify relevant impacts and assess them all. It does not devote undue attention to, for example, the unthinking promotion of competition. The section in the Economic Specialist Study dealing with opportunities for the promotion of competition is in fact significantly shorter and was given significantly less attention in the overall assessment when compared with the assessment of impacts on Chevron, for example.


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Issues/Comments Raised Commentator(s) Source Response from Project Team It is also claimed that the mere choice of the section heading name

(i.e. “Impact on Competitors”) is somehow proof that the Chevron’s concerns are “viewed exclusively through the prism of competition”. This claim has no basis. Competitors is simply a generic term to describe Chevron’s status vis-à-vis Burgan. The heading could also be used interchangeably with “Impact on Chevron” with absolutely no change to the assessment. In Section 4.2.4 of the The Economic Specialist Study it is stated that “…in 2009 the Minister of Trade and Industry announced a special designation of the petroleum industry given its strategic importance and contribution to economic stability.” Recognition of the strategic importance of the sector is thus clearly here and elsewhere in the study such as in the discussion of strategic stocks policy.

17.8 The EIA documentation has not adequately dealt with the issue of alternatives to the project. The EAP’s response in this regard is that “a number of alternatives are addressed in the DEIR. These are clarified in Section 4.19 of the DEIR” Whilst Section 4.19 of the DEIR has been amended, the consideration of alternatives remains inadequate. The only alternatives considered are “site layout alternatives” and the “no-go alternative”. With regard to site layout alternatives, insufficient information is provided and there is no balancing of the relative advantages and disadvantages of the alternatives identified. The consideration of the “no-go alternative” is also insufficient, with the EAP noting merely that “the opportunity to improve the efficiency in the logistical fuel supply chain would be lost and TNPA would also lose the opportunity of maximizing use of this portion of the port” The PetroLogistics Report contextualises the perceived inefficiencies in the fuel supply chain logistics and infrastructure.

17.8 Chevron’s position is noted. The DEIR adequately and sufficiently addresses the question of alternatives in the context and nature of the proposed Project. The no-go alternative has been adequately considered against the outcomes of the impact assessment in Chapter 9 of the EIR.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Multi-purpose nature of the Burgan terminal: 18. The concern relates to the lack of detail regarding the proposed operational business model of the Burgan terminal and the extent to which the terminal operator or its customer base will rely on imports to ensure the viability of the facility. The DEIR and specialist reports are particularly vague on the precise operational model that will be employed.

The proposed facilities operations, including the dual nature of bulk storage and the enabling of importation/exportation of product, are dealt with in detail in Chapter 4 of the EIR, upon which specialist studies are based.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 19. The following references in the EIA documentation evidence the link between the construction of the terminal and the ultimate use thereof for the importation of product into the Cape Town market:

19.1. “The intended use of the facility is for liquid bulk storage including imported and exported products under a lease agreement for a maximum period of twenty (20) years.”

19.2. “This would include the facilitation of direct imports to Cape Town.”

19.3. “The proposed facility would be multi-purpose in nature and could be used for the storage and distribution of both locally produced fuels and imported fuels.”

19.4. “…the facility could be used for the storage and further distribution of fuels produce.”

19.5. “…the project would introduce new import, storage and distribution facilities to Cape Town.”

19.6. “The project will bring increased fuel storage infrastructure, and allow for fuel importation thereby increasing the security of supply in the Western Cape.”

19.7. “It would allow or greater flexibility in storage, importation and further distribution at times and in circumstances where this is desirable… This would include the facilitation of direct imports to Cape Town…”

19.8. “…the facility would provide the infrastructure that would facilitate or allow for fuel imports in competition with Chevron’s local production.”

19. Correct, the DEIR states clearly that the proposed facility would have the purpose of bulk fuel storage and enable the importation/export of fuel products.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 19.9. With reference to Clean Fuels 2, the Economic Specialist Report also states that there “will be an increased requirement to import these fuels. This process could be facilitated by the infrastructure that would be provided by the proposed Burgan facility.”

See response above.

20. The PetroLogistics Report identifies that the link between the total design capacity of the facility and the proposed business model of Burgan is unclear. The precise requirements in terms of either an anchor tenant or the fuel sector market (in terms of an appropriate supply and demand analysis of the market) is also unclear. The lack of clarity regarding the proposed ultimate use leads to the conclusion that the potential exists for a significant portion of the facility to be utilised for importing or trading purposes.

The proposed facilities operations, including the dual nature of bulk storage and the enabling of importation/exportation of product, are dealt with in detail in Chapter 4 of the EIR. The maximum expected product throughput of the facility is clearly stated as 805,000m3/yr.

21. It is noted that VTTI, together with a BEE partner, will be acquiring Burgan Cape Terminals. VTTI is owned by Vitol which is one of the largest energy traders in the global market. This lends support to the concern that the Burgan terminal will be utilised for importing or trading purposes.

See responses above. Burgan Oil response: VTTI is owned by 2 shareholders which are 50% MISC Berhad and 50% Vitol. VTTI a listed company in the NYSE (New York Stock Exchange), is a global independent oil storage and distribution service provider, providing state of the art logistics infrastructure and delivering service excellence. All its activities in reference to the shareholders are conducted at arm’s length basis in compliance with United States of America and International regulations on related party transactions. Burgan’s proposed project will offer storage and distribution services to all oil marketers on equal basis also in compliance with NERSA regulations.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 22. To the extent that the potential exists for a significant volume of product to be imported into the Cape Town market, it follows that the potential consequences of this scenario must be assessed in the requisite detail in the DEIR. For the reasons stated below, the DEIR has not assessed accurately the consequences of the ongoing import of product.

See responses above. The maximum expected product throughput of the facility is clearly stated as 805,000m3/yr. The DEIR has undertaken a detailed impact assessment on the maximum expected throughput.

23. Equally if the intent of the Burgan terminal is to enable the satisfaction of the projected demand for Clean Fuels 2 ahead of government regulatory certainty (and associated upgrades of local refining capability), then this too will potentially impact on the viability of the Chevron refinery by threatening the major infrastructural investment that would be required to upgrade the refinery. If that is a likely effect then the full consequences of this scenario must be considered, evaluated and assessed.

To the extent that the Chevron Refinery will or will not have adequate investment is outside the ambit of this EIA.

Import function/capability of the Burgan terminal: 24. As indicated above, the Economic Specialist Report identifies that the Burgan terminal would be a multi-purpose facility, catering potentially for the storage and distribution of both locally produced and imported fuels. The Economic Specialist Report correctly identifies that it is this potential for the Burgan terminal to be utilised for importing product which is the primary basis of Chevron’s concerns.

Correct.

25. The Economic Specialist Report deals with Chevron’s concerns by stipulating that the applicant is merely constructing the infrastructure that could (ultimately) “facilitate or allow” the use thereof for imports. Burgan itself, it is claimed, is not engaged in the act of importing.

This is correct. Burgan Oil will own and operate the storage facility, and it will be Burgan Oil’s clients that may import fuel product through the facility. It however recognises that there are potential impacts (including for Chevron) as a result of that construction and has assessed these in some detail.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 26. The contention in the Economic Specialist Report and the FSSR is to the effect that Burgan - as the applicant in the current NEMA application - is not responsible for the activities which go to the heart of Chevron’s ultimate concern with this facility. The inference being that if any impacts do arise in connection with the import of products, those impacts are associated with the conduct of the customers or clients of the Burgan terminal, for which Burgan itself is not responsible (and which impacts fall outside the scope of the EIA process).

This is incorrect, this EIA process does consider the process of importation of fuel products as within the scope of the EIA process, and the identified impacts from the importation of fuel product are assessed in detail in the ESS and the EIR. The Economic Specialist Study states that “… it is important to understand that the facility would provide the infrastructure that would facilitate or allow for fuel imports in competition with Chevron’s local production. The companies that would pay Burgan Oil to use the facility (i.e. Burgan’s tenants) would, however, be those engaging in the importation, not Burgan Oil. In addition, it is important to bear in mind that facilities already exist for the importation of fuel in the Port or Cape Town and that the major oil companies currently engage in importation. This has important implications for potential mitigation measures as it would require intervention by authorities who have the primary mandate for the economic regulation of the liquid fuels sector including the regulation of fuel imports.” The study therefore does not contend that Burgan Oil would have no responsibilities. It does make the logical yet important point that any mitigation with respect to fuel imports would require the involvement of the institutions tasked with the regulation of fuel imports. In addition, the Economic Specialist Study does not use the above clarification to “avoiding the consideration of all relevant project-related impacts in the EIA process” (see comment 27). All relevant impacts are considered including those associated with potential fuel imports.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 27. The following observations are made in respect of the potential for the facility to serve an import function: 27.1. The distinction sought to be drawn between Burgan’s conduct in constructing a bulk product storage and handling terminal and the ultimate use thereof is aimed at avoiding the consideration of all relevant project-related impacts in the EIA process. 27.2. The attempt by Burgan’s EIA consultants to draw a distinction between the act of construction and the ultimate use of the facility, without due regard to the potential consequences of that facility is disingenuous. This is not an appropriate or legitimate stance for the purposes of the EIA process in terms of the NEMA EIA Regulations. The distinction sought to be drawn is apparently intended to avoid a consideration of all potential adverse socio-economic effects associated with the project. 27.3. The facility will give rise to the potential for significant volumes of product to be imported (for the reasons stated herein the total ullage and associated design capacity of the terminal indicates that the economic efficiency of the project will, in all likelihood, only be realised through the use of the facility, or a significant portion of the total ullage, as an import terminal). The entire basis of the “most likely” scenario in the FSSR is unfounded as there is nothing that precludes this potential outcome (of the terminal being utilised for importing product) from occurring.

27.1 The DEIR and the EIA process has considered all relevant project-related impacts, including the potential impacts derived from the process of fuel product importation. 27.2 There is a correct, factual distinction between the construction and operation of the facility as a storage facility and the process of fuel importation. The potential impacts (consequences) of both of these have been identified and assessed in detail in the EIA process. ERM refutes the accusation that ERM has used the above distinction to ignore any potential impacts (consequences). All relevant potential socio-economic impacts have been assessed in detail in this EIA process, including and specifically those potentially resulting from the importation of fuel. 27.3 The Project’s financial viability is considered in detail in Section 5.5 of the EIR. Additionally, in this context, the maximum expected product throughput of the facility is clearly stated as 805,000m3/yr. The importation of fuel is included as a factor in the FSSR’s ‘most likely’ scenario, which is soundly based on multiple factors, including market demand and the regulatory framework in place to regulate the importation of fuel.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 27.4. This is not an issue of the “economic regulation of the liquid fuels sector” to be determined exclusively by NERSA in terms of a discrete licensing process. For the reasons stated in our letter dated 5 May 2014 the enquiry into socio-economic impacts operates as an independent enquiry into the merits of the application (and general desirability of the project) in terms of the NEMA EIA Regulations. The primary purpose of the socio-economic impact analysis in terms of the EIA Regulations is to assess whether the specific development proposal is desirable in terms of, among others, economic efficiency grounds and to provide a framework for the evaluation of feasible alternatives based on a considered understanding of all project-related environmental effects or impacts. The socio-economic analysis in the DEIR has not achieved this purpose. 27.5. The PetroLogistics Report confirms that capacity of the Burgan terminal gives rise to the potential for significant quantities of the product to be imported into the Cape Town market. Two aspects flow from this conclusion, namely: 27.5.1. The consequences of this fact (i.e. the potential outcome or impacts associated with the import of product) must be investigated and assessed as part of the EIA process. 27.5.2. The likelihood that the import of product into the Cape Town fuel market ahead of market demand for that import will impact on the viability of Chevron’s operations at the Milnerton refinery must be investigated and assessed as part of the EIA process.

27.4 The DEIR and the ESS have assessed whether the specific development proposal is desirable in terms of, among others, economic efficiency grounds and provide an evaluation of feasible alternatives based on a considered understanding of all project-related environmental and socio-economic effects or impacts. Note that Dr Hugo Van Zyl, the author of the ESS, was also a key author of the guidelines of how economic assessed should be used in the EIA process and under the NEMA EIA Regulations. 27.5 As stated clearly in the DEIR the maximum expected product throughput of the facility is 805,000m3/yr. 27.5.1 The EIA has assessed in detail the potential impacts arising from the potential importation of fuel based on the stated maximum expected product throughput of 805,000m3/yr. 27.5.2 This potential impact has been assessed in detail in the FSSR, the ESS and in Chapter 8 of the EIR.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 27.6. The Economic Specialist Report and the FSSR state that there is a strong likelihood that the customers of the Burgan terminal will source product from the Chevron refinery. This claim is, of course, entirely speculative. It is not a valid basis for excluding a consideration of all potential project-related impacts 27.7. Notwithstanding the fact that an anchor tenant for approximately 50% of the 118,000m3 total tank capacity of the Burgan terminal has been secured, there is nothing concrete in the DEIR which suggests that the facility will not be utilised for significant imports. If, on the other hand, the securing of an anchor tenant somehow precludes the utilisation of the facility for significant imports then this is not clear from the EIA documentation. As indicated above, the size of the ullage provided for in terms of the project design capacity suggests that imports will inevitably form a key component of ensuring the long-term viability of the proposed terminal. The facility is simply too large to sustain itself without recourse to bulk imports in order to ensure the viability of the business model of the terminal operator. 27.8. The argument in the Economic Specialist Report that opportunities and facilities already exist for the importation of product also highlights that there is no immediate justification for the Burgan terminal based on the need to cater for or accommodate imports. This also recognises that current infrastructure at the port for the purposes of importing product are adequate. The facility cannot therefore be justified on the basis that it is seemingly addressing a particular infrastructural constraint. The PetroLogistics Report confirms that the petroleum product infrastructure capacity is considered adequate for current and projected supply operations.

27.6 All relevant potential project-related impacts have been considered and assessed in the EIA process, including those arising should the Burgan Oil customers not source product from the Chevron Refinery. 27.7 The maximum expected product throughput (importation capacity) of the facility is clearly stated as 805,000m3/yr in the DEIR. The financial viability of the project is described in Section 5.5 of the EIR. 27.8 The analysis of the need and desirability of the project has not been solely based on addressing a particular infrastructural constraint. Multiple factors have been considered in the analysis of the need and desirability of the project, as detailed in Chapter 5 of the EIR. The fact that opportunities and facilities already exist for the importation of product, does not lead to the conclusion that there is no immediate justification for the Burgan terminal based on the need to cater for or accommodate imports.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Burgan Oil response to 27.7, 27.8:

Burgan has signed long term oil storage and throughput contract with 2 customers which represents 50% of the project’s operational capacity. One of the customer, the anchor tenant is a major oil marketing company with more than 30 years of operational experience in South Africa. The customer currently purchases all its oil demand for Western Cape from Chevron although it has access to import products by itself. The customer nevertheless regularly imports product through the existing Chevron facility due to shortage of supply from Chevron. The 2nd customer is a small scale oil marketer who does not have access to storage and distribution facility. The customer currently purchases its demand from the existing major oil marketers. These 2 contracts give sufficient minimum return on investment to Burgan to secure its board approval and proceed with construction. Nevertheless, Burgan is currently in advanced discussion with other major oil marketers in Western Cape, Eskom and SSF (strategic storage) for the remaining capacity of the project. The anchor tenant and all other oil marketers (including Chevron, during formal meetings) acknowledged that the Burgan project will reduce the logistics constraints and improve the flexibility to accommodate demand surge.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 27.9. In summary, the import function of the terminal gives rise to the legitimate concern that the import of product ahead of market demand for such imports will have socio- economic impacts that have not been assessed. This concern cannot be discarded on the basis that the EIA process “is not the appropriate mechanism for determining issues of policy and governance relating to petroleum imports”. For the reasons set out in our previous comments this issue falls legitimately within the context of the EIA process. For the reasons set out herein the assessment of this issue is inadequate. The EAP is requested to reconsider its assertion that the DEIR “appropriately identifies and assesses ecological, social and economic impacts”.

27.9 The potential socio-economic impacts as a result of the import function of the facility have been identified and assessed in detail in this EIA process (see Chapter 8 of the EIR, and the ESS and FSSR). These potential impacts have not been ignored or disregarded in this EIA process. The DEIR appropriately identifies and assesses ecological, social and economic impacts.

28. The Economic Specialist Report and the FSSR have relied on the Burgan terminal offering improved security of supply as a justification for the need for the terminal. According to the FSSR, “the provision of a storage facility will greatly assist with the security of supply in Cape Town”.

28. The analysis of the need and desirability of the project has not been solely based on improved security of supply. Multiple factors have been considered in the analysis of the need and desirability of the project, as detailed in Chapter 5 of the EIR.

29. The FSSR, in its assessment of the “most likely” scenario, explains that 50% of the Burgan facility’s storage capacity will be utilised by the anchor tenant. This will then leave a remaining 50%, which according to the FSSR’s “most likely” scenario could be used for imports of petrol50 and diesel50 and as a storage facility for strategic stocks.

29. This is correct.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 30. The PetroLogistics Report assesses the assertion that the Burgan facility will enhance security of supply. The PetroLogistics Report concludes that an additional terminal in the harbour is not the most desirable alternative in the pursuit of achieving security of supply objectives. The PetroLogistics Report also concludes that it is unlikely that a substantial ullage of the facility will be commissioned for the dedicated purpose of holding strategic stock. Accordingly, the use of the facility for holding strategic stock cannot be used in support of the argument that the facility will not result in significant imports.

30. Chevron’s position is noted. As responded to comments above, security of supply is not the only aspects factored into the need and desirability of the project. Multiple factors have been considered in the analysis of need and desirability, and project alternatives. The maximum expected product throughput (importation capacity) of the facility is clearly stated as 805,000m3/yr in the DEIR, regardless of the volume allotted for strategic stock. The impact assessment, specifically the ‘worst case scenario’ in the FSSR, has been undertaken on the basis of this stipulated maximum throughput. Therefore the use of the facility for holding strategic stock has not been used in support of an argument that the facility will not result in significant imports. The maximum throughput of the facility has been taken into consideration.

31. A rigorous and up to date supply and demand analysis is critical to analysing the need for the Burgan terminal. Given the clear likelihood for a facility of this scale and nature to be utilised for the importation of fuel (and the effect thereof on the Chevron refinery’s viability), it is essential that the supply and demand analysis is both appropriate and as accurate as possible.

31. The FSSR includes a specialist industry sector study containing a rigorous and up to date supply and demand analysis.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 32. The FSSR has not relied on the most accurate data made available by Chevron for the purposes of projecting market demand. Although Chevron refinery production data is commercially sensitive (and therefore may not be released in the public realm), it is possible for the specialists in the EIA process to have sight of this information in order to more accurately model projected growth in market demand. This was the basis upon which PetroLogistics was commissioned and in terms of which PetroLogistics has provided an accurate analysis of the supply and demand balance. Chevron undertakes to make the same level of information available to Burgan’s EIA consultants with a view to ensuring an accurate supply and demand analysis informs the EIA process (subject to its rights regarding the protection of commercially sensitive information).

See previous responses.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 33. Chevron has obtained the opinion of PetroLogistics regarding the supply and demand analysis provided in the FSSR. The PetroLogistics review of the FSSR concludes that there is a surplus of product to support market growth for the next 10 years, which calls into question the accuracy of the supply and demand analysis in the FSSR. The accuracy of the projected import requirement of 690Ml of product in the FSSR is not borne out by the more accurate projection provided by PetroLogistics. It is also important to note that a significant proportion of the imports are imported in one month of the year when the Chevron refinery goes through its annual maintenance planned shutdown. This import volume is not ratable across the year. This fact lends further support to the argument that any imports outside of the shutdown period will invariably impact on the refinery’s production.


34. Based on the PetroLogistics supply and demand analysis the need for a facility of this scale and nature is questioned.

Chevron’s position is noted.

Impact on Chevron refinery: 35. Chevron recognises the potential for the Burgan terminal to have some beneficial impact in meeting certain requirements and needs in the fuel sector market. Be that as it may, Chevron persists with its concern that the EIA process has failed to recognise that the proposed facility could have a significant and detrimental impact on Chevron’s operations and the socio-economic environment.

Noted. See other responses.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 36. The primary adverse impact of the supply of imported product into the Cape Town market would be the economic impact of backing-in or displacing production at the Chevron refinery (and the associated socio-economic implications if the viability of the Chevron refinery was adversely affected).


37. The EIA process plays a critical role in enabling decision-makers to appreciate the full range of potential consequences associated with a project of this nature. The primary concern with the EIA process to date has been the failure to identify, evaluate and assess the socio-economic effects, and significance of impacts associated with the proposed Burgan terminal. The revised DEIR fails to address this concern as the full range of potential consequences (in the scenario where production capacity at the Chevron refinery is displaced or “shut-in” as a result of the import of product into the Cape Town market ahead of a sustained market short) have not been assessed. For the reasons stated in the PetroLogistics Report the supply and demand analysis in the FSSR is flawed and the extent of the adverse impact on the Chevron refinery has also been understated.



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Issues/Comments Raised Commentator(s) Source Response from Project Team Based on the PetroLogistics Report, we wish to highlight the following: 38.1. There is insufficient information to discount the use of the Burgan terminal for the importation of fuels through the facility. The FSSR’s reliance on (1) shipping costs and (2) import permit requirements regulated by the Department of Energy (as a basis for suggesting imports are unlikely or regulated by NERSA) does not address the substance of the concern regarding the impacts of the ongoing supply of imported product. 38.2. The inevitable effect of the unwarranted importation of fuels through the facility will be to cause the shutting in or the displacement of production at the Chevron refinery. 38.3. The projected volumes that could be backed-in or displaced (and the projection of costs associated with displacement) referred to in the FSSR is incorrect based on the fact that the supply and demand analysis is not accurate. 38.4. The volumes of product that could be imported through the facility are significant (based on the overall capacity of the facility as a whole, or the residual capacity of the terminal on the assumption that 50% of the ullage is taken up by the anchor tenant for the purposes of satisfying its own market needs or as a basis for strategic stock reserve). The PetroLogistics Report reveals that the configuration and design capacity of the Burgan terminal could enable the importation of 2400 Ml per annum. This is significantly higher than the 805 Ml per annum stipulated in the DEIR.



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Issues/Comments Raised Commentator(s) Source Response from Project Team Contextualising the role of the Chevron refinery: 39. The DEIR has failed to reflect the fact that the Chevron refinery fulfils a critical role in the fuel sector market and the local and regional economy in South Africa.

This is incorrect. The role that the Chevron Refinery fulfils in the fuel sector market and the local and regional economy is specifically described in detail in Section 3.6.2 of the ESS and Section 7.7.2 of the DEIR, fully recognising the important role that the Chevron Refinery fulfils.

Chevron comment provided in 39, 40, 41, 42, 43, 44 have been summarised below with a response in the response column. : : Contextualising the role of the Chevron Refinery and the contribution/usefulness of the Econex Economic Impact Report commissioned by Chevron.

As is recognized by Chevron, the Econex report focuses exclusively on quantifying the impacts of Chevron spending in the economy on item such as salaries, suppliers etc. It is important to bear in mind that it does not assess all the economic impacts associated with the Chevron refinery focusing, as it does, on expenditure driven impacts. The report therefore essentially provides additional contextual detail focusing on the positive impacts of Chevron expenditure. However, it does not provide a particularly meaningful contribution to assessment of the impacts of the proposed Burgan project as the positive impacts associated with the Chevron Refinery are clearly already recognized in the Economic Specialist Study and are relatively self-evident. Indeed, it is in recognition of the importance of Chevron’s contribution to the economy that the Economic Specialist Study devotes significant attention to the assessment of impacts on Chevron. In this regard, the Fuels Sector Specialist Report concluded that the proposed Burgan project would not entail a threat to the viability of Chevron’s operations. Without such a threat, there would also be no significant potential knock-on socio-economic impacts thereby obviating their further quantification.

40. Given the likelihood of a potentially significant impact on the Chevron refinery, it is critical that an accurate analysis is not avoided based on the “inherent uncertainties in the forecast of demand and supply balances” The PetroLogistics report reveals that, based on an accurate supply and demand analysis, the likelihood of a significant adverse effect on Chevron’s operations is a valid concern.



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Issues/Comments Raised Commentator(s) Source Response from Project Team 41. Chevron has commissioned an Economic Impact Report prepared by Econex (the “Econex Report”), a copy of which is attached hereto marked Annexure “C”.

Noted.

42. The Econex Report provides an expert analysis of the total contribution of Chevron’s Milnerton refinery to the South African economy. The purpose behind providing the EIA consultants with the Econex Report is to facilitate an appropriate understanding and consideration of Chevron’s concerns relating to potential impacts on its operations and, crucially, to facilitate an understanding of the significant potential adverse economic effects in circumstances where the viability of the Chevron refinery could be affected by the Burgan terminal.

ERM thanks Chevron for providing the Econex Report. Please note that the authors of the ESS Dr Hugo van Zyl and Prof Anthony Leiman undertook the ESS with a full understanding of the information regarding the Chevron refinery that is contained in the Econex Report.

43. The Econex Report highlights the fact that the Chevron refinery and its direct suppliers make a significant impact on the national economy. The economy-wide impacts of the Chevron refinery are substantial, with several industries being linked to or dependent on the operations of the Chevron refinery. It follows that any project which potentially impacts on the viability of the Chevron refinery’s operations must consider not only the direct impact associated with impacting on the viability of Chevron’s operations, but must also consider the indirect adverse impact on the other industries and suppliers who or which depend on the Chevron refinery for their viability.

Noted. See response to 42.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 44. The Econex Report is also intended to ensure that relevant concerns are appropriately factored into the impact assessment process and the resultant decision-making process with particular regard to the potential socio-economic consequences should the viability of the refinery be compromised. The failure to assess appropriately the consequences for Chevron’s operations and the associated socio-economic implications for both the fuel sector market and the local, regional and national economy constitutes a material flaw in the EIA process.

Noted. See response to 42.

45. To date the DEIR, has failed to: 45.1. Accurately assess the manner in which the viability of the Chevron refinery could be compromised by the Burgan terminal. 45.2. Assess the full nature and extent of consequences and environmental externalities associated with the Burgan terminal.

45.1 Chevron’s position is noted. See responses above. 45.2 Chevron’s position is noted. See responses above.

Summary of Chevron’s Concerns 46. There is no certainty that the Burgan terminal will not be utilised to import significant volumes of product for which there is no discernable need at this point in time. Although there is a current market short for ULSD this on its own does not justify or warrant an investment in infrastructure of the nature and scale proposed by Burgan, as the current market short is being met in terms of current infrastructure capacity.

The maximum expected product throughput (importation capacity) of the facility is clearly stated as 805,000m3/yr in the DEIR. The financial viability of the project is described in Section 5.5 of the EIR.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 47. The likelihood of the Burgan terminal being utilised to facilitate the import of significant volumes of product is strong. The size of the facility in relation to the ullage required by the anchor tenant is well in excess of that reasonably required to achieve supply area requirements. The FSSR recognises that storage of strategic stocks “for companies without facilities in Cape Town” would be an added benefit only. The principal motivating factor for requiring a terminal with a total tank capacity of 118 m³ is therefore not clear.

The maximum expected product throughput (importation capacity) of the facility is clearly stated as 805,000m3/yr in the DEIR. The proposed project is described in detail in Chapter 4 of the EIR.

48. In order to maximise the “efficiency” and achieve economies of scale associated with the terminal there is a strong likelihood that a significant portion of the Burgan terminal ullage will be utilised for import purposes in order for the facility to be viable. There is nothing in the DEIR or the specialist reports to suggest that there is a defensible argument for indicating why this (viz an inevitable reliance on import trade) will not be a certainty of outcome associated with the project.

The maximum expected product throughput (importation capacity) of the facility is clearly stated as 805,000m3/yr in the DEIR. It is incorrect that ‘There is nothing in the DEIR or the specialist reports to suggest that there is a defensible argument for indicating why this (viz an inevitable reliance on import trade) will not be a certainty of outcome associated with the project’ , to the contrary the EIA process and the assessments undertaken have assumed that imports will take place.

49. The suggestion that customers of the terminal will draw product directly from the Milnerton refinery is speculative. In any event, even if some of the terminal’s capacity is taken up by product supplied by the Chevron refinery, the nature of the likely surplus capacity (provided for by a terminal with a tank capacity of 118 m3) is that the remaining capacity will be taken up through the import of product.

The maximum expected product throughput (importation capacity) of the facility is clearly stated as 805,000m3/yr in the DEIR. The worst case scenario modelled by the FSSR is based on this, assuming that the customers of the Burgan terminal will not draw product directly from the Chevron Refinery. The inputs of the fuel sector specialist indicate that, notwithstanding inherent uncertainties, risks to the continued viability of the Chevron Refinery should be negligible for the most likely scenario and low for the worst case scenario with mitigation.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 50. The suggestion that this scenario (i.e. the importation of significant volumes of product) is unlikely to arise due to the (1) deterrent effective shipping costs and (2) NERSA import licensing requirements fails to address the fundamental and underlying concern, namely, the potential consequences for the Chevron refinery’s operations should imports at the Burgan terminal result in Chevron being required to shut-in or displace production.

See response to 49.

51. The consequences of Chevron being required to shut-in or displace production will potentially affect the viability of the Chevron refinery for the reasons stated in the PetroLogisitcs Report.


52. There has been no reasonable and considered attempt by the EIA consultants to grapple with the full potential consequences of the scenario where the viability of the Chevron refinery is affected. The PetroLogistics Report illustrates how the import of product would affect the viability of Chevron’s operations and the Econex Report highlights the important role that the Milnerton refinery plays on the local and regional economies. The consequences of the Burgan terminal have not been evaluated, considered or assessed. Neither the FSSR nor the revised Economic Specialist Report address this fundamental concern to the requisite degree required in terms of NEMA and the EIA Regulations.

See responses above.

53. The supply and demand analysis in the FSSR is flawed for the reasons stated in the PetroLogistics Report



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Issues/Comments Raised Commentator(s) Source Response from Project Team 54. For the reasons identified in the PetroLogistics Report, clarity is required regarding the volumes that the Burgan terminal has the capacity to both receive and dispatch. In this regard, the Traffic Specialist Report does not reflect the full extent of the potential impact.

See responses above. The Traffic Specialist Report was undertaken with knowledge of the Project as detailed in Chapter 4 of the EIR.

55. Current infrastructural capacity and capability could already enable the import of product to cater for the “need” scenarios highlighted at page 5 in the FSSR without the need for an intervention in the form of the Burgan terminal.

The Need and Desirability, and the Financial Viability of the Project is described in detail in Chapter 5 of the EIR, taking multiple factors into consideration, not solely related to the importation of fuel products.

56. With regard to transitional clean fuels ahead of the upgrade of local refineries to comply with the pending regulation of Clean Fuels 2, the fuel industry is currently working with Government to understand how transitional clean fuels can be best introduced into South Africa. The country is essentially balanced on gasoline production and demand, and any import of low sulphur gasoline ahead of the regulation of Clean Fuels 2 would cause refineries to cut back production, which would cause economic hardship. If the Burgan terminal is aimed at providing a solution which potentially allows for imports of transitional fuels ahead of the large investments that local refineries will be required to make to comply with Clean Fuels 2 will not necessarily be in the best interests of the country. The impacts associated with this scenario are potentially widespread and will have multiple socio-economic effects across the economy. This has not been assessed in the EIA documentation.

The current situation with Clean Fuels 2 is fully understood by the authors of the ESS and FSSR, and taken into consideration in the assessments undertaken.


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Issues/Comments Raised Commentator(s) Source Response from Project Team 57. The compatibility of the Burgan terminal with policy also needs to take into account the imperative to protect local refinery production, which is an equally important policy objective. For the reasons stated herein, Chevron remains concerned that importing significant volumes of product will impact significantly on the sustainability of the Chevron refinery and will therefore place the proposed Burgan terminal at direct odds with the policy imperative of protecting and securing local refining capability. A balanced reflection of the competing policy imperatives is required. It is not sufficient to avoid the issue on the basis that Burgan, as the applicant, will not be directly engaged in imports. It is also not a valid argument to suggest that this issue (i.e. the impact of imports) falls to be regulated exclusively by NERSA in terms of a separate statutory mandate.

See response to 17.6 above.

58. Given the lack of credible information regarding the precise “multi-purpose” nature of the facility, the viability of the terminal (in terms of its current design capacity) is questionable unless the terminal provides for the import of product on an ongoing basis


59. In order to enable the selection of the best practicable environmental option the EIA process should identify the potential uses of the facility with more clarity. The EIA process should enable a considered comparative assessment of the relative advantages and disadvantages of each of the potential uses of the facility. The purpose of such an analysis would be to identify with more clarity the ultimate use of the facility and the nature of the impact of each possible use on the socio-economic environment and the viability of the Chevron refinery.



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Issues/Comments Raised Commentator(s) Source Response from Project Team 60. Insofar as the terminal will be or could be utilised for the import of product then the nature, extent and significance of that impact falls to be assessed in the EIA process. For the reasons indicated in the PetroLogisitcs Report the impact of imports on Chevron’s refining margins have been grossly understated in the Fuel Sector Market Report. PetroLogistics contends that in light of the refining margins that have prevailed in the oil industry over the last five years, coupled with projected trends expected to prevail in the future, the shutting in of 20% of the Chevron refinery’s production would be unsustainable and would threaten the viability of the refinery. The impact of this has not been assessed in the EIA process.


61. If, on the other hand, there is credible data to suggest that the figure of approximately 820 Ml per annum (being the extent to which refinery production could be required to cut back to accommodate the quantity of product imported through the Burgan terminal) - which equates to approximately 20% of the Cape Town market for the combined gasoline and diesel service - is unreasonably high, then such data must be made available to stakeholders as part of the EIA process.


62. In conclusion, the DEIR does not satisfy the requirements for a reasoned and competent assessment of the impacts of the Burgan facility on socio-economic conditions.



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Issues/Comments Raised Commentator(s) Source Response from Project Team 63. The failure to identify (and appropriately consider and evaluate) the nature, extent and significance of anticipated adverse environmental effects is a material deficiency in the EIA process. The resultant failure to recognise these effects on the socio-economic environment will result in the section 2 NEMA principles being compromised through the decision making process.


Background: The oil and gas sector plays an important role in the development of Cape Town' s economy and the contribution it makes to the city's economy is expected to grow. Analysts forecast that the industry will contribute R7, 2 billion to Cape Town' s economy and employ roughly 11 400 people by 201 4. The lack of fuel offloading infrastructure at ports, minimal on-loading and offloading infrastructure as well as minimal storage capacity have all been highlighted by the DoE as decreasing the petroleum industry's ability to adequately deal with supply irregularities as well as adversely impacting on both petroleum pipelines and rail operations and ports are considered an integral part of the petroleum industry's logistical value chain. The Eastern Mole is located within the Port of Cape Town which is a large multi-purpose port located in Table Bay. The site is split info two plots. Plot 1 is the road loading and office area and plot 2 is the tank storage area.

D. Georgeades District Head (Table Bay & Tygerberg) Environmental & Heritage Management

Letter dated 21 August 2014

ERM thanks the City of Cape Town for their engagement with the proposed Project. The proposed bunding is detailed in Chapter 4 of the EIR and spill prevention measures regarding bunding are stipulated in the EMPr Annex K of the EIR.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Analysis: Type of Development: Plot 1: •Five off two arm bottom loading gantries complete with additive injection and ethanol/fatty-acid methyl ester blending facilities; •Two off additive storage tanks and pump skids additive and unleaded petrol; •Fire/foam pump station; •Fire water/foam tonk; •Office block; •Guard house; •2.4m high security fence complete with truck entrance/exit gales and emergency exits; •Vapour Recovery Unit; and •Associated lighting and closed circuit television. Plot 2: •Three off bunded storage areas; •Import/export manifold; •Road loading pump bay Automotive Gas Oil (AGO) - six off 2, 0001 1/m pumps; •Road loading pump boy Unleaded Petrol(ULP)- five off 2, 0001 1/m pumps; •Motor Control Centre(MCC) and Generator building; •2.4m high security fence complete with truck entrance/exit gates and emergency exits; •Associated lighting, closed circuit television and bund access roods; and •An above ground 10 inch diameter 900m long pipeline operating at about 6 bar pressure. Solar panels with power pocks will be installed on the lighting fixtures and on office building roofs for power output. Rainwater will be collected in water tanks for the flush toilets to be installed.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Receiving Environment: Climate: The City of Cope Town has o Mediterranean climate. Lowest rainfall is in February and highest in June. The most predominant wind in the area is the South Easterly wind. The second predominant wind is from the North Westerly direction. Air Quality: Nitrogen Dioxide levels in Cape Town’s CBD remain high, but below the guideline amount. Sulphur Dioxide levels have dropped consistently. Oceanography: The site is located by rocky headlands at Moville Point ir1 the south and Blouberg in the north. Strong tidal currents are not observed. Geology: The terrain is composed of and underlain at depth by meta-sedimentary strata of the Tygerberg Formation, Malmesbury Group. This usually contains grained siltstone. Phyllitic shales. Greywacke.and quartzite. Seismicity: There are no known or proven faults in the site vicinity.


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Issues/Comments Raised Commentator(s) Source Response from Project Team Impact Assessment: This development will impact the economic growth of the City of Cape Town in a positive way as our economy is shifting towards the services sector. The City of Cape Town is satisfied and agrees with the Impact Assessment conducted in the Basic Assessment report. The City of Cape Town also agrees with the following: • Traffic Impact Statement •Economic Assessment •Air Quality Impact Assessment •Contamination Site Assessment •Quantitative Risk Assessment •Environmental Impact Assessment The only major concern is the bunding of all the storage tanks. but this have been accurately and thoroughly addressed in the Basic Assessment Report. There will also be tank gauging and tank overfills protection. The project location falls within the identified Coastal Risk areas. But this has been addressed in the report. The City of Cape Town also approves of the pre- and post-mitigation measures of all the impacts assessed in this report.

Documents

Comments and Responses Report - ERM · 2014-10-22 · The comments received from I&APs and responses are given in the first section of ... that this activity would trigger the activities