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The Fundamentals for Success
Presented by : JCA Naude, Managing Director of Sasol Gas
June 2005
Mozambique to South Africa Natural Gas Project :
9th Africa Oil & Gas, Trade & Finance Conference
NOT AN OFFICIAL UNCTAD RECORD
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Pande
Temane
Vilanculos
BEIRA
MAPUTO
Temane and Pande gas reserves- where it all started
Namibia
Botswana
Zimbabwe Temane
Durban
Richards Bay
MaputoJohannesburg
Republic of South Africa
Namibia
Botswana
Zimbabwe Temane
Durban
Richards Bay
MaputoJohannesburg
Republic of South Africa
Namibia
Botswana
Zimbabwe Temane
Durban
Richards Bay
MaputoJohannesburg
Republic of South Africa
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Scope of the US $1.2 billion project
GAS FIELD DEVELOPMENT
Temane / Pande
Nelspruit Komatipoort
Maputo
Beira
Secunda
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GAS PROCESSING FACILITY
Temane
Nelspruit Komatipoort
Maputo
Beira
Secunda
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Temane / Pande
Nelspruit Komatipoort
Maputo
Beira
865 km PIPELINE
Secunda
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Temane / Pande
Nelspruit Komatipoort
Maputo
Beira
865 km Pipeline
Secunda GAS SUPPLEMENTS COAL
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Temane / Pande
Nelspruit Komatipoort
Maputo
Beira
865 km Pipeline
Secunda
CONVERT 500 CUSTOMERS
Sasolburg
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Temane / Pande
Nelspruit Komatipoort
Maputo
Beira
865 km Pipeline
SecundaSasolburg
REPLACE COAL WITH GAS
COMPLETED JUNE 2004
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What made the Project possible
Initial Pande and Temane gas field assessments by ENH
ENH and Sasol partners in developing the Pande and Temane gas fields
Anchor load provided by Sasol
Bi-lateral trade agreement – South Africa and Mozambique
Attractive investment environment
Effective involvement of government entities
Regulatory dispensation in South Africa
Balanced distribution of benefits
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C
P
F
Transporter Buyer / Shipper / Distribution
Field
Moz 30%
Sasol 70%
CPF
Sasol 100%
Moz 30%
Pipeline
Sasol 100%
50% combined option• Moz• South Africa – in process of
exercising 25% option
MarketSasol internal and external markets
Sellers
Shareholding
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Mozambique Country Manager appointed early
Ministerial Steering Committee (Mozambique)
Multi level interfaces with government, NGO’s
Project Liaison Committee
Co-ordinates government department activities
Joint project task teams
What worked well for the Project
Structured interfacing at three levels
Ministerial
Governmental
- National
- Provincial
- District
Community
Social development benefits to communities
Cross border commission
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Stakeholder Interaction
Tailored communication plan
Transparency and mutual trust
Managing stakeholder expectations
Joint committees e.g. Projects, Promotions committee, Ministerial Task, Group and Project Liaison Committees
Community interface forums and a complaints register
Personal contact with Authorities in Mozambique and South Africa
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Environmental Realities
International best practices
Environmental Task Team between Sasol and Mozambique Authorities
Independent Environmental consultantswere appointed
Ongoing consultation with communities and authorities
Respect for cultural symbols and community wishes
Regular environmental audits
Rehabilitation after pipeline construction
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Stakeholder Management / Communication
Communities
South African Government
NGO’s
Local Authorities
Landowners
Media
Community Leaders
Business Partners
South Africa and Mozambique
Mozambican Government
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Financing Agreements
Highly complex hybrid financing-benefits of corporate
loan and project financing
Mitigation of potential political risk
“Project Finance Deal of the year 2004 African Oil and Gas
Bridging finance (from Sasol and Others) while finance
was being arranged
Financial institutions included
Export Credit Agencies
Multilateral Institutions
Commercial Institutions
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Numerous Agreements
Bi-Lateral trade agreements-South Africa and Mozambique
Regulatory/Licensing Agreements
Commercial Agreements includingPipeline Shareholders Agreement
Joint Operating Agreement
Gas Sales and Transport Agreement
Financing Agreements
Construction Agreements
Operating Agreements
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Key Success Factors
Successful negotiation of agreements
Effective involvement of government entities
Supportive legislative environment
Stakeholder involvement
Acknowledgement of key environmental issues
Integrated project management structure
Corporate Social Investment
Servitudes and land issues
Local content
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Corporate Social Investment
Needs identified through consultation with Communities and Local Authorities
More than US$ 6 million was allocated for social investment projects along the pipeline route in Mozambique and South Africa
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Corporate Social Investment – South Africa
Flagship Projects include :
Over 100 Computers to various schools
Mobile Libraries
Wheelchairs and Crutches for the disabled
AIDS support centres and homes
Construction of Classrooms
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Corporate Social Investment - Mozambique
Flagship Projects include :
Primary Schools in various provinces
Sports stadium in Vilanculos
Community Bakeries
37 new water boreholes
Repair of dams
Medical clinics
Community markets
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Local Content
Local suppliers preferredContactors required to maximise the use of local resources205 Mozambican companies received a share (29%) of the projectLocal Content clauses included in the contactsTraining and transfer of skillsJob creation (South Africa)
Total of 430 workers employed for 20 months760 workers at peak of project
Job creation - Mozambique1500 workers were employed during the project 3200 workers at peak of project
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Sustainability of Success
Honour agreements with all parties involved in the project
Comply with all the requirementsof the lending parties
Continue with Social Investment Programs
Government Liaison in Mozambique and South Africa
Community communications and Stakeholder relationships
Comply with all Regulatory requirements
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The Way Forward
Optimisation of volumes from existing gas reserves
Exploration for new reserves
Investigating further gas markets in Mozambique and South Africa
Continued interaction with communities along the pipeline route in terms of sustaining the project
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Benefits of the Project – South Africa & Mozambique
Diversification of energy portfolioEnvironmental benefitsSocial development projectsMajor private sector investment in new infrastructureEmployment and capacity developmentRevenue to Government for 25 yearsOpportunities for black economic empowermentCapacity development (e.g. pipe material)
Unlocking of natural wealthForeign investmentEconomic growthSocial development projectsTaxes / Royalty / Cash bonusSkills developmentEmploymentInfrastructureCapacity development (e.g. transport)
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The Mozambique Natural Gas ProjectNEPAD in action ?
Partnership between African countries Anchoring the development of Africa on its resources Acceleration of regional integration Economic and other benefits to both countriesCapacity building Increased investments Social development Job creation
Indeed, NEPAD in action !
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Mozambique to South Africa Natural Gas Project :
The Fundamentals for Success
Thank You