ROYAL BAFO­KENG GIVES OIL AND GAS A BOOST IN SAL­DANHA BAY R2.6bn

CityPress - - Business - JUSTIN BROWN justin.brown@city­press.co.za

African com­mu­nity in­vest­ment com­pany Royal Bafo­keng Hold­ings is in­volved in two oil and gas projects in Sal­danha Bay in the Western Cape that could re­sult in a to­tal out­lay of just more than R4 bil­lion.

The first project is the Sun­rise En­ergy liq­uid pe­tro­leum gas (LPG) im­port fa­cil­ity, sit­u­ated near ArcelorMit­tal’s Sal­danha steel mill as well as Transnet’s iron ore han­dling fa­cil­ity, to which An­glo Amer­i­can’s Kumba Iron Ore rails its iron ore from its mines in the North­ern Cape.

Royal Bafo­keng holds a 30.6% stake in Sun­rise En­ergy. Phase 1 of the project, cost­ing R1 bil­lion, was com­mis­sioned on May 27 and was of­fi­cially launched this week.

Other key share­hold­ers in Sun­rise En­ergy in­clude the In­dus­trial Devel­op­ment Cor­po­ra­tion with a 31% stake, and the Public In­vest­ment Cor­po­ra­tion with 29.4%.

Sun­rise En­ergy CEO Pi­eter Coet­zee said this week that the next two phases planned for the Sun­rise En­ergy ter­mi­nal would each cost R200 mil­lion, re­sult­ing in a to­tal fur­ther out­lay of R400 mil­lion.

A road-to-rail fa­cil­ity is planned, at a cost of about R50 mil­lion, that will al­low LPG to be de­liv­ered by rail. This will en­able the dis­tri­bu­tion of LPG in the in­land ar­eas – as far as the Free State, Namibia and Botswana – by 2018.

Royal Bafo­keng CEO Al­berti­nah Kekana said Sun­rise En­ergy’s LPG im­port and stor­age ter­mi­nal was the largest in Africa.

“There is a need in our mar­ket for an en­tity that is prefer­ably born of African in­ge­nu­ity and skills ... in the pro­vi­sion of oil and gas in­fra­struc­ture.”

Sun­rise would be an in­de­pen­dent LPG ter­mi­nal founded on an open-ac­cess model, added Kekana.

“It will be free of con­flicts of in­ter­est in terms of ei­ther be­ing a pro­ducer or trader on the one hand, or a down­stream player on the other,” she said.

The other Sal­danha project in which Royal Bafo­keng is in­volved con­cerns a R2.6 bil­lion oil tanking ven­ture, cur­rently un­der con­struc­tion.

Royal Bafo­keng holds a 50% stake in this, while Ger­man com­pany Oil­tank­ing owns the other 50%. The project is set for com­ple­tion by 2019.

Kekana said: “When com­pleted, it will be the only ded­i­cated oil blend­ing and stor­age fa­cil­ity in Africa.”

Re­gard­ing the Sun­rise En­ergy fa­cil­ity, Coet­zee said it was de­signed to meet LPG sup­ply, es­pe­cially in the Western Cape. Phase 2 of its con­struc­tion could take place in four years’ time, with phase 3 pos­si­bly get­ting the go-ahead in six to eight years’ time.

The timing of both ex­pan­sions will de­pend on mar­ket de­mand.

Phase 1, which be­gan op­er­a­tions last month, is set to gen­er­ate a monthly through­put ca­pac­ity of 17 500 tons of LPG a month, which should dis­place 400 megawatts of power gen­er­a­tion and 5 500 tons of LPG stor­age space.

Coet­zee said in July that the Sun­rise fa­cil­ity’s through­put amounted to 7 000 tons of LPG.

Phase 2 will see the monthly through­put climb to 35 000 tons of LPG a month, and stor­age space will in­crease to 11 000 tons. Phase 3 will see monthly through­put hiked to 52 000 tons of LPG a month, which is ex­pected to dis­place 1 200MW of power. Stor­age space will ex­pand to 16 500 tons.

Coet­zee said there was a huge op­por­tu­nity for growth in the mar­ket as the only other LPG load­ing fa­cil­i­ties in the country were in Richards Bay and Port El­iz­a­beth. The lat­ter ter­mi­nal is to be moved to Coega.

Con­struc­tion on phase 1 of the Sun­rise En­ergy ter­mi­nal took 16 months. Dur­ing this time, 474 lo­cal jobs were cre­ated and 1 750 jobs were cre­ated in the down­stream sec­tors when the fa­cil­ity be­gan op­er­a­tions.

“For ev­ery 10 tons of LPG we put through the ter­mi­nal, one down­stream job is cre­ated,” Coet­zee said.

Down­stream jobs in­clude those for ter­mi­nal op­er­a­tors, gas in­stall­ers and en­gi­neers.

“LPG for cook­ing and heat­ing is very ef­fi­cient. LPG is 20% to 50% cheaper than us­ing elec­tric­ity,” said Coet­zee.

Two in­ter­na­tional ag­gre­ga­tors bring LPG to Sun­rise En­ergy’s ter­mi­nal in Sal­danha, and then about eight com­pa­nies dis­trib­ute the LPG lo­cally. Once all three phases of Sun­rise En­ergy’s fa­cil­ity have been com­pleted, 5 000 down­stream jobs will be cre­ated.

The fa­cil­ity utilises a multi­buoy moor­ing sys­tem, a sub­sea and over­land pipe­line that is more than 5km long, as well as stor­age and blend­ing fa­cil­i­ties.

Out­side South Africa, Royal Bafo­keng – via its sub­sidiary, Min­ing, Oil and Gas Ser­vices – is also in­volved in the Ghana Pe­tro­leum Moor­ing Sys­tems ter­mi­nal and the Horn of Africa pipe­line in Ethiopia.

The lat­ter is a 550km mul­ti­prod­uct fuel pipe­line project that will sup­ply diesel, petrol and jet fuel to meet Ethiopia’s grow­ing de­mand.

Kekana said the Horn of Africa pipe­line could cost $1.5 bil­lion (R20.05 bil­lion) to build, but that only about $40 mil­lion had been spent so far on the project’s tech­ni­cal and fi­nan­cial fea­si­bil­ity.

Min­is­ter of En­ergy Mmamoloko Kubayi said at the Sun­rise En­ergy launch event that trans­for­ma­tion in the LPG sec­tor was of “great con­cern”, es­pe­cially with re­gard to the par­tic­i­pa­tion of women.

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