9TH AFRICA OIL & GAS, TRADE & FINANCE CONFERENCE

AN UPDATE ON THE KUDU GAS FIELD

MAPUTO3 JUNE 2005

KEVIN STALLBOMBUSINESS UNIT MANAGER: KUDU

NOT AN OFFICIAL UNCTAD RECORD

Kudu history – key milestones

• Discovered 1974 by Chevron/Regent/Soekor

• Two wells drilled by Swakor 1987-88

• Licence awarded 1993 – Shell (75%), Energy Africa (25%)

• Energy Africa farm-out 15% to Texaco

• Petroleum field declared 1997

• Drilled four wells

• Shell relinquished 2002 - ChevronTexaco (60% + operatorship), Energy Africa (40%)

• ChevronTexaco relinquished Nov 2003 – Energy Africa 100%

• Dec 2003 - Energy Africa 90%, Namcor 10%

• Tullow Oil acquires Energy Africa May 2004

Kudu Licence Area: Block 2814A

• 170 km to Oranjemund

• 800 km to Windhoek

• 800km to Cape Town

• Logistically remote area

• Development overlaps Namdeb diamond mining area

Kudu Upstream JV

Energy Africa Kudu Limited (90%)

Namcor (10%)

+ PartnersKudu Power Station Company

Nampower (100%)

+ Partners (?)

Gas Sales Agreement

Nampower

Power Purchase Agreement

Domestic sales in Namibia

Power Purchase Agreement

Eskom - export sales to RSA

Kudu Project Scheme

What have we done differently……

• Initiated a “fresh” look at the broader development options

• Recognized current window of opportunity in power market

• Focused development on proven GIIP only : de-linked Phase 1 gas-to-power project from upside development opportunities

• Established “open book” co-operative approach with downstream parties

Kudu Steering Group

Co-ordination, consultation, guidance, consensus (as per MOU/LOI)

Upstream

Petroleum Agreement

License 005, Area 2814A

JOA

Energy Africa

Namcor

+ Partners

Relationship defined

Downstream

Kudu Power Station Company

Nampower

Eskom

+ Partners (?)

Relationship still to be defined

Joint Development Agreement

Final Investment Decision

First power

Distinct but integrated elements of same project

milestones

Co-operative “management” structure

The Southern Africa Power Pool (SAPP) experiencing diminishing generation surplus capacity in the region caused by:

• increasing power demand at a rate of three percent per year (1200MW) in the last six years

• If no new generation project then in 2007, the SAPP will run out of generation surplus capacity.

• There has been no significant investment in generation in the last 10-years, despite the rise in power demand.

Power demand growth in SADC

SAPP Generation Vs SAPP Load Forecast

-

10,000

20,000

30,000

40,000

50,000

60,000

2003 2005 2007 2009 2011 2013

Year

Capa

city

[MW

}

Net Capacity Peak Demand

Courtesy

Power stations in Namibia

Ruacana

Hydro, Run-of-the-river

Van Eck

Coal fired,Standby

Paratus

Diesel & HFOStandby

Katima

Diesel, not connected to rest of Grid

ANGOLAZAMBIA

BOTSWANA

REPUBLIC OFSOUTH AFRICA

Atlan

tic Ocean

Walvisbay

Ruacana 240 MW

Van Eck 128 MW

Rundu

Windhoek

Lüderitz

Paratus 24 MW

Katima 3 MW

Oranjemund

Kudu 800 MW

Courtesy

Namibian transmission backbone

Otjikoto

Omburu

Kokerboom

2

2

2

2

Ruacana

Aries

Otjikoto

Obi

b

Gerus

Rössing

Walmund

Hardap

van Eck

ANGOLAZAMBIA

BOTSWANA

REPUBLIC OFSOUTH AFRICA

Atlan

tic Ocean

AggeneisTo Hydra

To Koeberg

Otjikoto

Kokerboom

Auas

Red – 400KV

Blue – 330 KV

Yellow - 220 KV

Courtesy

Kudu Power Station: impact on region

• Timing, availability of new generation in 2009

• Strengthening of regional grid

• Reduction in transmission losses

• Diversification of energy mix portfolio, especially to encourage the introduction of natural gas and to increase the role of renewable energy sources

• Socio-economic injection

• Development of Namibia’s gas resources

Progress made on Kudu project – (1)

Joint Development Agreement

• July 2004 - Energy Africa, Namcor, Nampower & MOU with Eskom

Commercial Agreements

• Draft Heads of Agreement tabled and negotiation process begun

Power station site & pipeline route

• Pipeline route dependent on power station site

• Conclusion on discussions with Namdeb expected soon

Kudu Power Station Configuration

• 2 x 400 MW (nominal) Single Shaft Combine Cycle Gas and Steam Turbines

• Mechanical draft evaporative cooling towers with sea water make-up

Courtesy

Kudu Power Station LocationUubvley

25 km

Pipeline route options

Progress made on Kudu project - (2)

FEED study – confirmation of project feasibility

• Development concept selected - protects schedule and budget

• FEED study contract awarded to John Wood Group, results due July 2005

• EIA approved

Reprocessing 1993/96 3-D seismic survey

• Contract awarded to CGG

• Completion October 2005

• WATER DEPTH : 170m

• RESERVOIR DEPTH 4400mbmsl

• HIGH PRESSURE – 536 bar

• HIGH TEMPERATURE – 158°C

• DRY/SWEET GAS – 96% CH4

• 2-3 bbls/MMscf CONDENSATE

• DETERMINISTIC GIIP (Tscf)

EA

GCA

PROVED1.38 1.45

PROBABLE 3.28 2.72

POSSIBLE 9.92 7.12

Kudu field area

Kudu development plan

• Robust and simple

• Proven technology

• Realistic schedule

• Potential to realise the upside

• Commercially viable

0

100

200

300

400

500

600

2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034

YEARS

GA

S R

ATE

: MM

scf/d

Matched production profile

Total well capacity

Production profile

Pre-feasibility development concept

FEED development concept selection

Subsea – Umbilical Option

Subsea – Control Buoy

Katabatic winds &aerosol sand plumes

• Further technical challenge for onshore facilities

• Avoided offshore by subsea development

Kudu

Gas

-to-P

ower

pro

ject

pla

n

1st half 2006: Final Investment Decision & Financial Close

2006 : Upstream Construction

2007 : Downstream Construction

5 July 2004: Signing of JDA & MOU,Full Feasibility Phase Starts

1st Quarter 2009: Gas on-shore

2nd Quarter 2009: 1st 400MW

3rd Quarter 2009: 2nd 400 MW

Beyond Phase1 Kudu Gas-to-Power……..

Phase 1: 800MW gas-to-power project

• 2004 – 2005

– seismic reprocessing

– FEED study

– GSA & PPA

– Financing

– Partners

• 2006 – 2008

– Construction

• 2009

– production

Post - Phase 1:options

• Additional gas-to-power

• Liquefied Natural Gas, Gas-To-Liquids, or Compressed Natural Gas

• Gas export to South Africa

Current post-Phase 1 activities

• Complete planning for drilling two wells in 2006 to confirm the upside potential in greater Kudu field area. Drilling timing dependent on:

– Rig and materials availability

– Partners (?)

• High level techno-economic evaluation of the earlier work on the three post-Phase1 options and prepare work program for further investigation

• Preparing to bring in new partners - probably during second half 2005

In summary:-

• Phase1 - 800MW gas-to-power project progressing well with final investment decision expected early 2006

• Post - Phase1 activities for evaluation of +/- 8 Tscf GIIP upside:

– Preparation to drill two wells in 2006

– Evaluating development options for three scenarios

Additional gas-to-power

LNG / GTL / CNG

Gas export to South Africa

• Preparing to bring in additional partners during second half 2005