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Future Fuel Distribution Strategies for Southern Africa, 2 & 3 November 2011, Southern Sun O. R. Tambo International, Gauteng
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FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
1
FUTURE FUEL DISTRIBUTION STRATEGIES
FOR SOUTHERN AFRICA
How Road, Rail together with Pipelines can work together
to guarantee Security of Supply to Gauteng
Leslie Naidoo (Commercial Manager)
Transnet Pipelines
2 & 3 November 2011 Southern Sun O.R.Tambo, Kempton Park
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
2
oOverview of Transnet Pipelines
oFuel Industry Overview
oTransnet Infrastructure to service the market
oHow Road , Rail and Pipelines can working together to
ensure Security of Supply
ORDER OF PRESENTATION
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
3
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
4
Our core business is the bulk transportation of energy (energy carrier).
Turnover of about R2,0 billion/annum, EBITDA almost R1,5 billion.
About 600 (582) Employees; Head Office in Durban with depots and workshops scattered over five provinces of South Africa.
We own, maintain and operate 3800 km of high pressure, underground steel pipes supplying energy (petroleum and gas) to the economic heartland of our country. At any moment the SA Oil Industry has 450 million liters of fuel in our system.
We transport energy in the form of a variety of petroleum products such as petrol, diesel, crude oil and jet fuel as well as Gas through our pipelines and our clients are the Oil Companies of South Africa.
Primary (“First Choice”) mode of transport of our clients for Liquid Fuels
• Safe, bulk volumes, reliable, environmentally friendly carrier
Our pipelines are like arteries supplying energy to the eastern parts of our country and are key elements to ensure an appropriate supply of petroleum products to meet security of supply challenges.
Capacity constraints in our pipeline system could hamper economic growth in our country’s heartland. Present petroleum pipeline between Durban and Gauteng is operating at maximum capacity which is insufficient to meet demand.
TPL therefore plays a strategic but also commercial role in the petroleum and gas industries of South Africa and is the custodian of strategic pipeline infrastructure in the country.
AN OVERVIEW OF TPL
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
5
UNDERGROUND PIPELINE (HERE WITH INTELLIGENT PIG IN LINE)
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
OVERVIEW OF TPL : TYPICAL INTAKE DEPOT : OUR DEPOT AT DURBAN AS EXAMPLE
6
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
OVERVIEW OF TPL : TYPICAL PUMPSTATION ALONG PIPELINE ROUTE
7
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
OVERVIEW OF TPL : TARLTON DEPOT : EXAMPLE OF A DELIVERY DEPOT
8
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
9
We transport about 18 billion litres of the different petroleum fuel products on an annual basis. This equates to 850 road tankers per day for the refined products only – a 8,5km long train of tankers per day.
TPL transports about 50% of the SA refined product fuel requirements.
100% of the inland Natref Refinery’s crude oil requirements are transported through our crude oil pipeline.
Approximately 80% of O.R. Tambo International Airport’s jet fuel requirements are transported to the Airport through our pipelines.
Methane rich gas (MRG) supplied to industrial customers in Newcastle, Richards Bay and Durban areas, key in their drive to use cleaner energy.
AN OVERVIEW OF TPL … continued
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
0
5,000
10,000
15,000
20,000
25,000
30,000
2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 LE 2011/12 BGT
Refined National Demand (Ml)Crude
OVERVIEW OF TPL: VOLUMES TRANSPORTED BY TPL OVER PAST 10 YEAR PERIOD COMPARED TO OVERALL DEMAND IN SOUTH AFRICA (MILLION LITRES (Ml))
Notes:Growth-pattern: GDP -1%. Continued steady growth.Pattern of change in overall demand before and after 2008 economic downturn Economic downturn had little effect on TPL’s volumes transported – system at capacity.Market share for TPL: Just above 50% ( as percentage of ) 10
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
11
BACKGROUND – LIQUID FUELS INDUSTRY
• Demand : 60% inland, 40% coast.
• Supply : two inland refineries, four coastal refineries
• Currently demand is greater than supply : imports through Durban and Cape Town
• Primary distribution from supply points to depot network (pipe, rail (or combination), road)
• Secondary distribution from depot network to customers (road) 12
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
LIQUIDS FUEL INDUSTRY
12
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
POINTS OF PRODUCTION AND SUPPLY INTO SYSTEM ZONE C AS AREA TO BE SUPPLIED NO FORCED BUT LOGIC (EXCHANGE) UPLIFTMENT FROM SECUNDA AND SASOL NATREF. INLAND PRODUCTION TO BED BUT INLAND PRODUCTION STATIC, GROWTH SUPPLIED EX COAST.
MARKET DEMAND
IN AREA
(Billion liters/a)
TOTAL FOR 2012/13
16,9
SUPPLIED FROM
7,9 5,0 4,0
NMPP-LINE (2,9 bl/a)DJP-LINE (2,9 bl/a) (with DRA’s)5,8 bl/a (Refined products)
DURBANPRODUCTION
TOTALSASOL
NATREFAT COALBROOK
SECUNDA (Sasol)(Refined)
Refined equivalent
CRUDE
Rail and Road: 2
,1 bl / a
(1,9 bl / a
Rail; 0,2 b
l / a Road)
SAPREF
ENREF
IMPORT THROUGH PORT OF DURBAN
13
Note : Values are indicative / order of magnitude volumes in billion litres per annum
INLAND DEMAND – INLAND SUPPLY= SHORTFALL EX DURBAN
INLAND DEMAND
PRIMARY LOGISTICS OVERVIEW
• Pipeline from Durban, Sasolburg, Secunda to inland depots; Alrode, Langlaagte, Waltloo, Tarlton, Rustenburg, Witbank, Ortia in Gauteng
• On road and on rail from pipeline depots to road/rail depots, as well as road/rail direct from source to final depot
• DJP pipeline constrained - road and rail from Durban, East London, Port Elizabeth and Maputo to inland
• NMPP pipeline to start operations in 2012 – pipeline constraint from Durban removed 14
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
PRIMARY LOGISTICS OVERVIEW
14
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
PPT-1741
INDIANOCEAN
LADYSMITH
BETHLEHEM
VOLKSRUST
NEWCASTLEKROONSTAD
KLERKSDORP
WITBANKKENDAL
WALTLOO
SECUNDA
STANDERTON
ALRODE
COALBROOKSASOLBURG
TARLTON
LESOTHO
NATAL
FREE
STATE
GAUTENG
N
RUSTENBURG
NORTH - WESTMPUMALANGA
KWAZULU /
AIRPORT
VRYHEID
RICHARDS BAY
AFRICA
VAN REENEN
EMPANGENI
JAMESON
DURBAN
PARK
CAPE TOWN
DURBAN
GAUTENG
SOUTH AFRICA RICHARDS BAY
LESOTHO
SECUNDA
REFINED PRODUCTSCRUDE OILGASAVTUR
FUTURE NMPP PIPELINES
PRETORIA WEST
SCHEMATIC MAP OF TPL’S EXISTING NETWORK ALSO INDICATING THE ROUTE AND POSITION OF THE NEW MULTI-PRODUCTS PIPELINE (NMPP)
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICASCHEMATIC MAP OF TPL INFRASTRUCTURE TO SERVICE MARKET : WITH FULL NMPP SYSTEM CONFIGURATION FROM 2014 TO 2020 IN RELATION TO THE PRESENT NETWORK (GAS INCLUDED)
INDIANOCEAN
LADYSMITH
BETHLEHEM
VOLKSRUST
NEWCASTLEKROONSTAD
KLERKSDORP
WITBANKKENDAL
WALTLOO
SECUNDA
STANDERTON
ALRODE
COALBROOKSASOLBURG
TARLTON
LESOTHO
NATAL
FREE
STATE
GAUTENG
N
RUSTENBURG
NORTH - WESTMPUMALANGA
KWAZULU /
AIRPORT
VRYHEID
RICHARDS BAY
AFRICA
VAN REENEN
EMPANGENI
JAMESON
DURBAN
PARK
CAPE TOWN
DURBAN
GAUTENG
SOUTH AFRICA RICHARDS BAY
LESOTHO
SECUNDA
REFINED PRODUCTS
CRUDE OIL
GAS
AVTUR
FUTURE NMPP PIPELINES
PPT-1741
PRETORIA WEST
NMPP TERMINALS
RAIL NETWORK
17
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
RAIL NETWORK
17
SECURITY OF SUPPLY – PIPELINE CONSTRAINED
• The DJP Pipeline has been constrained from 2006 , and this is expected to continue until the introduction of NMPP capacity in 2012.
• During this time pipe, road and rail initiatives together have helped to keep Gauteng and the inland “wet” (supplied with petroleum products):
• Refined Products in crude pipeline
• Drag reducing agents (DRA’s) in pipeline
• Combined industry block trains (e.g. Energy Express from Durban to Nelspruit)
• Increased Jet fuel block trains from Durban to ORTIA
• Rail routes from Port Elizabeth and East London to Bloemfontein and Kimberley
• Additional road volumes from Durban to the inland
• As the pipeline is constrained, and rail also has finite capability, the use of road transport in this time period increased significantly.
• Road transport has advantages in terms of time to introduce new capacity, speed/flexibility in responding to market requirements, and reliability. However, there are also disadvantages in terms of cost, safety, road degradation, and environmental impacts (carbon footprint). 18
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
SECURITY OF SUPPLY
18
SECURITY OF SUPPLY – PIPELINE UNCONSTRAINED
• The introduction of NMPP capacity in 2012 will remove the Durban to Inland pipeline capacity constraint
• There will still be a role for the different modes of transport in ensuring security of supply. However, the roles should be different than during times of constrained pipeline capacity
• The following could be viewed as a desirable scenario from 2012 onwards :
PIPELINE
• Maximise pipeline volumes :
• Economical
• Safe
• Reliable
• Low environmental impact
19
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
SECURITY OF SUPPLY
19
SECURITY OF SUPPLY – PIPELINE UNCONSTRAINED
RAIL
• Complement pipeline transport rather than compete with pipeline
• Focus on strategic routes such as
• Jet fuel block trains Durban to ORTIA : keep the rail route open as a strategic alternative to pipeline
• Block trains from Durban to Waltloo : large rail off loading facilities recently constructed at Waltloo, well placed in the Gauteng market, provides a strategic alternative to pipeline
• Service depots which are coming off the pipeline : Ladysmith and Bethlehem
• Focus on long haul and large volume railing from pipeline terminals and inland refineries :
• Tarlton to Botswana
• Sasolburg and Secunda to Zimbabwe, Zambia, DRC
• Continue and maximise current on-railing opportunities from pipeline terminals :
• Kroonstad to Bloemfontein and Kimberley
• Waltloo to Polokwane and Mokopane
• Explore new on-railing opportunities from pipeline terminals
• Maximise routes where pipeline is not available such as :
• Maputo to Nelspruit and Matsapha
• Cape Town/Mossel Bay/Port Elizabeth to Northern Cape
20
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
SECURITY OF SUPPLY
20
SECURITY OF SUPPLY – PIPELINE UNCONSTRAINED
ROAD
• Minimise long haul road transport :
• Expensive
• Road degradation
• Environmental impact
• Safety concerns
• Focus on secondary delivery from depot to customer, not primary distribution. There is no realistic alternative to road in this regard
• Focus on short distance, low volume routes where rail is uneconomical
• Focus on routes where rail is not possible e.g jet fuel from refineries to airports in Cape Town, Durban, Port Elizabeth, George, Bloemfontein, etc
21
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
SECURITY OF SUPPLY
21
EXAMPLE OF MIXED MODES ENSURING SECURITY OF SUPPLY :WC2010 AIRPORTS
22
1
ORTIA COMPLEX (ACSA)1
ORTAFS2
ENREF REFINERYEngen
DURBAN COMPLEX
ENREF
SAPREF
RAIL LOADING
Rail Off Loading
NATREF REFINERYSasol, Total
BERTHS (5,6,7,8,9)IMPORTS
DJP
12" PIPELINE (M
ULTI)
6" Jet Pipeline
Dedicated Jet feed to ORTIA
Total requirement
33Ml/w
Requirement11Ml/w
Swing Supply to ensure Transnet meets average
requirements over period of month
Requirement22Ml/w
Presently 10Ml/mth
SAPREF REFINERYBP, Shell
1 Airports Company South Africa 2 O R Tambo Airports Fuel Supply
ORTIA :
• Pipe ex Natref – maximum throughput
• Rail ex Durban – increased volumes to cater for remainder of demand
• Pipe ex Durban – No jet fuel in DJP to allow for additional petrol and diesel volumes
OTHER AIRPORTS :
• La Mercy Durban, Cape Town, Lanseria, George, Bloemfontein, Nelspruit, Polokwane, Pilanesburg, etc
• Additional volumes supplied by Road
RESULT :
• No stockouts during WC2010
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
EXAMPLE OF MIXED MODES : ENSURING SECURITY OF SUPPLY WC2010 AIRPORTS
22
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
Source(e.g. Durban)
Primary Depot(e.g. Kroonstad, Waltloo)
Secondary Depot(e.g. Bloemfontein)
End Consumer
Pipe
Rail
Road
Rail
Road
Rail
Road
Road
Road
Primary Distribution
Secondary Distribution
PRIMARY AND SECONDARY DISTRIBUTION
Road
PRIMARY DISTRIBUTION: Bulk volumes by pipe, ship and block trainSECONDARY DISTRIBUTION: Single parcel delivery to final customer
Road
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
To have Security of Supply in Gauteng, all aspects of the supply chain have to work effectively and efficiently …..
24
-Product-Infrastructure-Resources
CLOSING REMARKS
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
25
THANK THANK YOUYOU
FUTURE FUEL DISTRIBUTION STRATEGIES FOR SOUTHERN AFRICA
26
SOME RISKS AND ITS IMPACT