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… initiating development and export of Mozambique’s substantial natural gas resources in an environmentally sustainable manner, thereby contributing towards economic growth and poverty reduction. Southern Africa Regional Gas Project.

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… initiating development and export of Mozambique’s substantial natural gas resources in an environmentally sustainable manner, thereby contributing towards economic growth and poverty reduction.

Southern Africa Regional Gas Project


A 865km 26-inch diameter Pipeline between the Gas Fields and Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

Project Description

Development of Gas Fields in Mozambique Inhambane Region (Pande and Temane)

A Central Processing Facility (CPF) to process/clean the gas before transport


Components in mozambique and south africa

Mozambique Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

Temane/Pande Gas Field Development

Central Processing Facility (CPF)

Pipeline between Temane and Ressano Garcia (at the border)

South Africa

Pipeline between Komatipoort and Secunda

Secunda Synthetic Fuels Plant Expansion

Sasolburg Plant Conversion

Natural Gas Network Conversion

Components in Mozambique and South Africa


Institutional implementation arrangements
Institutional & Implementation Arrangements Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

Downstream

Upstream Project

Pipeline Project

Point of Sale

Gas Fields

CPF

Pipeline

Point of Delivery

Central Processing Facility

Temane Pande

Users

Distribution

ROMPCO

Network

SCI Sasol Synfuels Natref Others

Sasol 100%

SPT 70% CMH 25% IFC 5%

SPT 70% CMH 25% IFC 5%

CPF Price

iGas Option CMH Option

-

Jointly up to 50%

Sasol Gas

Wellhead Price + CPF Price

Gas Buyer & Shipper

Transmission Tariff

Gas

Payment

Contract

Gas Transportation Agreement

Gas Sales Agreement

Sasol Gas


Project benefits
Project Benefits Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

  • General population

    • Long-term benefits from the provision of major infrastructure

      • Local gas market development through 5 take off points

      • Gas exploration and gas-based industries

    • Fiscal Benefits: About US$ 498 million in royalties and taxes over 25 years

      • Revenues transparently accounted for in the budget

      • Monitoring arrangements for expenditures through MTEF

    • Additional revenues are expected from returns on GoM equity participation

    • Environmental benefits through usage of cleaner fuel


Project benefits contd
Project Benefits contd. Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

  • Local communities

    • About 3000 jobs created during construction, of which 1000 are Mozambican nationals

    • Social Development Fund of US$ 5million established by Sasol for investment in community-based activities

  • Small businesses and local contractors

    • Increased opportunities for local suppliers of goods and services

  • Sector professional and management staff

    • On the job training and transfer of technology and expertise

    • US$ 3 million training budget provided by Sasol


Wbg approach to mobilize private financing and mitigate political risks

IFC Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

IFC Investment and Advisory Role:

Equity investment in Upstream

Advisory assistance to CMH in mobilizing financing for the Upstream

Facilitating local participation

MIGA

Political Risk Cover for equity and debt to SPT & Rompco including:

Breach of contract

Currency transferability

Expropriation

War & Civil Disturbance

WBG approach to mobilize private financing and mitigate political risks…

  • IBRD Enclave PRG

    Political Risk Cover for debt to SPT & Rompco including:

    • Sovereign obligations including changes in laws

    • Currency transferability

    • Expropriation

Changane River floodplain, vicinity of pipeline crossing

Stringing of the Pipe along the right-of-way in Mozambique


A regional project with world bank group participation
A regional project with World Bank Group participation… Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

Total Project Cost: US$ 1 billion


Ifc enabling mozambican participation
IFC:Enabling Mozambican Participation Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

  • Large project needed Mozambican participation to allay political risk and to give a sense of ownership

  • Mozambique’s dilemma: How to fund its equity without recourse to government money ?

  • IFC advised on strategic options to fund equity with a focus on local participation

  • Invest alongside CMH in the upstream component


Ifc equity investment and advisory role
IFC: Equity Investment and Advisory Role Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

  • 5% equity in the upstream project for a total proposed investment of $18.5 million

  • Mobilize funds for CMH

  • Local Participation

    • Phase 1: Institutional investors

    • Phase 2: companies and individual investors once revenue stream is stable


Miga phase i political risk cover for equity

SASOL Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

MIGA

ROMPCO

Branch

SPT

ROMPCO

MIGA Phase I: Political Risk Cover for Equity

ROMPCO Equity Guarantee

USD45 m

SPT Equity Guarantee

USD27 m

Equity

Equity

South Africa

Mozambique


Miga phase ii modification of coverage to include debt

SASOL Sasol’s plant in Secunda, South Africa, including 5 take off-points in Mozambique for future domestic gas use

SCMB

EFIC

SACE

MIGA

ROMPCO

Branch

SPT

ROMPCO

MIGA Phase II:Modification of Coverage to Include Debt

Re-insure

USD25 m

Re-insure

USD21.3 m

SPT Loan

Guarantee

USD25.65 m

ROMPCO Loan Guarantee

USD89.05 m (MIGA USD42.75 m, SACE USD25 m, EFIC USD21.3 m)

SPT Equity Guarantee

USD2.7 m

ROMPCO Equity Guarantee

USD4.5 m

Loan

Equity

Equity

South Africa

Loan

Mozambique


Using ibrd guarantees to support private enclave project in mozambique
Using IBRD guarantees to support Private Enclave Project in Mozambique

  • First IBRD Enclave guarantee:

    • …proposed guarantee for an export-oriented, commercial project generating foreign-exchange outside of Mozambique…

    • …adequate arrangements ensuring that the borrower will be able to meet its obligations to IBRD in respect of IBRD guarantee of the loan.

  • Use of a PRG is critical in achieving financial close:

    • Risk of the transaction

    • Benefits from an explicit counter-guarantee

    • Linkage with Bank’s remedies, Bank’s sector dialogue and conditionality.


Guarantee structure
Guarantee Structure Mozambique

GOM

Petroleum Production Agreement

Pipeline Agreement

SPT

(Sasol owned, Moz company)

ROMPCO

(Sasol owned, RSA company)

Indemnity Agreement

Project Agreement

Project Agreement

Loan Agreement

Loan Agreement

Guarantee Agreement SPT

Guarantee Agreement ROMPCO

SCMB (Lead arranger)


Proposed pricing of the guarantee
Proposed Pricing of the Guarantee Mozambique

  • Guarantee fee 2 % p.a. collected semi annually

    • Bank retains all

  • Standby fee 0.75 % p.a.

    • Bank retains all

  • Front-end fee 1%

  • Initiation fee US$ 100,000

  • Processing fee 0.50 % of principal of guaranteed loan

  • First Loss Project lenders to take first loss in amount equivalent of 5% of principal amount of the guaranteed loan plus six month interest payments for the applicable interest payment period.


Environment social safeguards compliance
Environment & Social Safeguards Compliance Mozambique

  • South African and Mozambican EIAs/EMPs (1999-2003)

  • Bank Group safeguard policies applied to the entire project

  • Bank Group has required the sponsor to carry out:

    • Regional Environment and Social Assessment (RESA) to assess the broader environmental context and manage the induced impacts

    • Resettlement Planning and Implementation Program (RPIP)

    • Social development Action Plan

    • A consolidated Summary and an Update to facilitate communication and disclosure

Pipeline re-routed to minimize impacts. 13 Baobabs that could not be avoided were transplanted.



Project agreements
Project Agreements Mozambique


Project agreements1
Project Agreements Mozambique

  • Petroleum Production Agreement (PPA): The GoM grants SPT and CMH exclusive rights for the development, production & disposition of reserves located in the Pande & Temane Field Reservoirs, “the Petroleum Production Area”.

  • Pipeline Agreement (PA): GoM grants authorization to ROMPCO to construct, own & operate the gas pipeline, related infrastructure & equipement to trasport natural gas, for 30 years.

  • Gas Sales Agreement (GSA): Regulating the commercial relationship between the sellers- SPT, CMH, & IFC, and the buyer, Sasol Gas Limited

  • Gas Transportation Agreement (GTA): Securing a revenue stream for Rompco though an adquate ship or pay obligation of the transporter, for 25 years

  • Joint Operation Agreement: Between SPT and CMH for the development of the Pande & Temane Fields. SPT is designated as the Operator under the Agreement

  • Cross-Border Agreement: Framework agreed by GoM and GoSA to facilitate trade of natural gas between the two countries

  • Regulatory Agreement: Provides for the licensing and sets out the scope of regulatory dispensation granted by the RSA under the Gas Act to Sasol


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