09 September 2014

1. Overview of the South African Gas Sectorand the role of PetroSAPresented to the Parliamentary Portfolio Committee on Energy 09 September 2014

2. Our Key messages in relation to Gas Sector 1 • PetroSA is well positioned to be the gas aggregator and the agent of the State to take on the challenge of growing the gas sector in South Africa. • We have accumulative experience in the gas industry across the entire value chain including access to proprietary GTL technology. • Our projects are of national significance (beyond Mossel Bay) and are fully aligned to that of the National Development Plan (NDP). 2 3

3. CEF alignment 1 • The CEF Group mandate is to invest in and develop gas and gas infrastructure in a manner which is commercial and can attract investment. • PetroSA is the implementing agent under CEF. • Integration of iGas into PetroSA will complement existing capabilities to be able to strenghten the value proposition of PetroSA in the gas sector 2 3

4. Our Mandate • Operate as a commercial entity and create value for the shareholder • Pay tax and dividends • Advance national objectives in the petroleum industry • Spearhead industry transformation • Complement & promote Government policy & strategic thrust • Advance energy goals and objectives as set out invarious • policy instruments , E.g. Energy White Paper (1998), Energy Security Master Plan • ( 2007), Medium Term Strategic Framework (2009-2014), National Development Plan

5. PetroSA has been a pioneer in integrated GTL business and gas field developments in South Africa • Established in 2002, PetroSA owns one of the world’s largest GTL refinery. • Multiple years of experience in developing and operating gas infrastructure. • Business spans petroleum value chain • Produces diesel, gasoline, kerosene and specialty products • Has produced ~70 MMbbl crude oil & 1 Tcf of natural gas to date. • Has upstream presence in South Africa, Equatorial Guineaand Ghana. PetroSA owns proprietary GTL technology

6. Historical Interventions to Sustain the GTL Refinery in the face of declining reserves We have years of experience in developing and operating complex gas infrastructure. • EM Field & Satellites • 2000 • FA Satellites • 1997 • Project Ikhwezi • (tight gas) • FA Field • 1992 • South Coast Gas • 2007

7. The need for Gas in South Africa • South Africa: • South African government recognizes the need for gas (NDP 2030/Draft IEP/IRP); • Diversify current energy mixAND reduce carbon footprint. • Gas-to-Liquids (GTL): • Declining feedstock; • Sustain the Mossel Bay economy • Growth opportunity to move into production of specialty chemicals; and • Establishes markets for upstream / shale gas. • Power: • 2013/14, Eskom spent R10.5-billion on diesel to operate its two OCGT’s in the Western Cape. • This was R8.1-billion above the R2.5-billion set aside by NerSA in its price determination. • Gas is a cleaner, ‘cheaper’ & more efficient source of energy; • Western Cape imports ~2050MW to meet its daily demand. • Current Energy Mix: • Gas currently accounts for only 2.8% in terms of primary energy source! • It is envisaged that 14% of electricity will be generated from gas by 2030. Source: Department of Energy, 2013

8. Current gas supply sources are limited and under-developed Note: Only ‘reserves’ are quoted in this table. The table does not include prospective or contingent resources, either offshore or onshore Investment and appropriate work programs to re-risk prospective resources and mature contingent resources into reserves categories are required

9. We are embarking on various initiatives to grow the role of Gas in the energy mix 1 • Sustaining the GTL refinery through development of additional feedstock • Importation of LNG, and associated pipelines to increase the usage of natural gas in RSA, for both power generation, GTL and industrial customers 2 Achieve energy security through becoming the leading supplier of gas for the benefit of RSA. • Continued offshore exploration and • commercialisation of offshore gas 3 • Participate in the exploration and • development of onshore gas (e.g. shale) 4 • Target discovered gas/acquire gas • in neighbouring Mozambique/Tanzania 5

10. We are evaluating various security of supply options for South Africa West Africa & Rest of the World East Africa Gas ~150 TCF gas finds West Coast gas • LNG importation project in progress • Plans are afoot to convert power plants: OCGTs to CCGTs • US IEA has estimated that SA may hold 390 Tcf of shale gas reserves • Project Mthombo entails building a new crude refinery for SA Shale Gas ~390 Tcf? South Coast Gas/Oil • LNG

11. PetroSA’s LNG importation project will unlock the growth potential for gas in South Africa • Proposed LNG terminal to comprise the following: • Offshore Infrastructure (jetty, trestle, cryogenic pipelines) • Onshore Infrastructure (storage tanks, re-gasification equipment, auxiliaries) • Associative Pipeline Infrastructure • Will create opportunities to supply Independent Power Producers (IPPs) • Various locations are being evaluated.

12. We are actively positioning ourselves for Shale Gas development • The company is actively positioning itself: • Established a dedicated Unconventionals Unit; • Contributing to the shaping of a suitable Regulatory Framework; • Developing in-house capabilities; • Pursuing strategic partnerships for research and technology development (incl. Tertiary Institutions, Service Oil Companies); and • Sustaining and growing gas infrastructure and markets. • The current regulatory uncertainty has resulted in a delay in the development of unconventional resources. The currently limited seismic and well data results in geological uncertainty! Shale Gas acreage We have past experience in shale gas drilling through Soekor!

13. Our initiatives are in full support of the objectives of the DoE and the NDP Addressed by PetroSA plans Amongst other initiatives, the NDP states… Short term: • Develop offshore gas. • Do exploratory drilling for economically recoverable shale gas reserves. • Promote investment in LNG landing infrastructure. • Introduce cleaner fuels. Medium term: • LNG infrastructure will be in place to power first CCGT’s.     

14. Required mechanisms to grow gas market • Policy: An enabling Policy, Legislative and Regulatory Framework (certainty and clarity) • e.g. MPRDA should empower PetroSA as the NOC , Gas Utilization Master Plan ( GUMP -framework for the gas development) alignment with the Power Sector & PetroSA’s own plans • Infrastructure: investment to unlock current constraints. • LNG diversifies supply and serves as a catalyst for indigenous gas development • Expand Gas pipelines to connect supply and demand • Markets: Guaranteed and sustainable gas off-takers. • Erect Independent Power Producers (IPPs) in optimal locations • Funding: Financial support for projects

15. Gas IS our business and gas is the future – it is imperative for SA to grow its gas market, and PetroSA is well positioned to lead in this space PetroSA has accumulative experience in the gas industry across the entire value chain including access to proprietary GTL technology PetroSA continues to cooperate with Eskom to provide a joint solution to change the energy mix in the country. Shale gas is a game-changer for SA - PetroSA is the most capable agent to supply the growing gas market in South Africa Concluding Remarks

16. End Thank you for your attention

17. Back up slide

18. PetroSA’s plans going forward in terms of SA’s gas and liquid fuel supply Sustaining the GTL Refinery Asset Development Programme Continued Exploration • MozGTL Advances security of energy supply, in-country and regionally, could help meet domestic and regional diesel demand • Further develop domestic upstream prospects • Develop a new crude refinery in Coega, Eastern Cape. Liquid Fuel Supply Mthombo Refinery Mozambique GTL