Presentation to Portfolio Committee on Environmental Affairs and Tourism

1. Presentation to Portfolio Committee on Environmental Affairs and Tourism Processes and mechanisms to ensure clean air 23rd August 2005

2. The Engen Refinery team Wayne Hartmann – General Manager Lynne Hanekom – HSE Manager Alan Munn – Sustainable Business Manager Sibongiseni Khathi – Environmental Services Manager

3. Why we think we are here: • Current media attention / legal action • Perception of poor environmental performance as a result ofEscalating Expectations • To provide you with actual performance information • To present our plans for the future • To answer any questions

4. Presentation contents: • Background to Engen and the refinery • Discussion of community issues / concerns • Discussion of actual environmental performance and comparison to standards / expectations (SO2 / flares / VOC’s) • Stakeholder relationships summary • The way forward

5. Background to Engen • Origins of the company date back to around 1900 • Engen created when Mobil disinvested from South Africa • 80% owned by Petronas – the Malaysian state oil company; and 20% by Worldwide Investment Holdings, a BEE company • Operates throughout Sub Saharan Africa • Consists of one refinery and large Marketing operation • Joint venture with Sasol liquid fuels in progress

6. Background to Engen Refinery • Initial construction began in 1952 • Site chosen-barren land South of Durban • Started as the Standard Vacuum Oil Company, became Mobil, Genref and finally Engen refinery • Initially a 15 thousand barrels per day (tbd) refinery • Has undergone numerous expansions / upgrades to current capacity of around 150 tbd • Is now a modern, highly complex refinery utilizing much state of the art technology. • Very little of the original refinery left

7. The Refinery site in 1950

8. The refinery in 1952

9. Aerial View of Refinery - 2004

10. History: Apartheid Era • Group Areas Act moved people of colour into buffer zones around industry • National Keypoints Act meant industry was seen as part of security establishment • Secrecy • Walls, fences, cameras, armed guards • As a result refineries were seen to be part of oppressive regime • Rocket attack and crude line explosion during 1980’s

11. General Environmental Issues Engen refinery: its location makes it the most visible Industry in the area One of about 140 industries in South Durban Responsible for about 10 - 20% of the emissions in South Durban (from MPP cost allocation database) Local Environmental NGO will not engage constructively (e.g. objections to projects that reduce emissions) Reality - Our side of the story never gets told

12. Current Perception is: • Excessive health risk to local community • Sulphur dioxide / flares / VOC’s (especially benzene) are a concern • Poor standards and Outdated technology • Poor performance / getting worse • Don’t care / Lack of commitment

13. Actual performance / standards To correct these incorrect perceptions we need to work with the scientific facts: • Strong support for the Multi Point plan • Accept that Engen is in a unique situation that requires better than normal solutions • Understand each problem and apply the correct technical solution on a prioritised basis • Work with all constructive stakeholders and understand each others issues / concerns

14. Sulphur Dioxide Lots of progress to date.. ..but not enough (although close to WHO guidelines) No easy answers!!!

15. Sulphur Dioxide (1) - where we are • Already achieved : 60% Reduction in SO2 emissions • “Superclaus” technology installed in 1993 (BAT) • Switched from high sulphur fuel oil to fuel gas (BAT) • FCCU DeSOx technology (BAT) • In World terms our emissions are not excessive • New ambient SO2 standards / guidelines are tough – presents challenges • Stacks are too low (airport proximity) • Very tight operational controls in place • All the easy solutions (low hanging fruits) are already complete • Major Capital Expenditure required for the next step change in emissions

16. Sulphur Dioxide (2) SO2 emissions (tons/day)

17. Sulphur Dioxide (3) : Best Available Technology (BAT) Source: IPPC Reference doc on Best Available Techniques for Mineral Oil and Gas Refineries. 2001

18. Sulphur Dioxide (4): How we compare to EU / US refineries • Data includes both simple and complex refineries and those operating on high and low sulphur crudes. • Engen is a highly complex refinery designed to run on high sulphur crude. • Engen is far better than the worst, but clearly has room to improve. Source: Equal Protection for All Populations? Evaluating the Links between Corporate Social Responsibility and Environmental Justice in the Oil and Gas Sector. Dr Andy Gouldson. Centre for Environmental Policy and Governance. London School of Economics and Political Science

19. Sulphur Dioxide (5)

20. Sulphur Dioxide (6) Total SO2 emissions (t/day) from South Africa - showing refining industries portion.

21. Sulphur Dioxide (7) • The new ambient SO2 standards / guidelines are very tight. • About twice as tough as the previous set • Based on health risk to susceptible populations • We are committed to achieving them and do not quite make these all the time (yet). • Transition issues.

22. Sulphur Dioxide (8) Groundlevel SO2 Exceedences (10 min - 191ppb)

23. Sulphur Dioxide (9) – Stack height limitations

24. Sulphur Dioxide (10) – Way forward • Short / Medium term options: • Sulphur Recovery Units • Tight operational Controls • Efficiency / Reliability improvements • Sulphur plant specialist visit • FCCU: • DeSOx Catalyst additive • Long term (High Capex) options: • Sulphur Recovery Units • Improve Recovery Efficiency • Tail Gas Scrubbing • FCCU • Clean Fuels Synergies: - Pre Treat and Post Treating options - FCCU flue gas Scrubbing (Cross media issues)

25. Flares Highly emotive issue Generally not a health issue Hidden agendas / Misinformation Refinery safety at risk

26. Flares (1) • The safety valve of a refinery • Seen as a nuisance / concern – good lever to drum up emotion • International focus on reducing flaring from oil / gas production fields • Can be misused (economic flaring) • Our flares meet BAT criteria • Very tight operational controls in place

27. Flares (2)

28. Flares (3) • Flares are there for safety reasons • Accepted as the environmentally acceptable way of disposing of excess gas • If operated correctly there should be no health impact • Excessive controls on flaring could adversely affect safety

29. Flares (4) : Best Available Technology (BAT) Source: IPPC Reference doc on Best Available Techniques for Mineral Oil and Gas Refineries. 2001 Note: Flare gas recovery system decommissioned – not enough gas for viable operation

30. Flares (5) • What is economic flaring? And why is it a problem? • Tight Operational Controls • Focus on control of incidents causing the flare • As the other refinery sources of emissions reduced the relative size of flare emissions becomes more significant

31. Flares (6)

32. VOC’s and Benzene Benzene is linked to one type of Leukaemia Highest risk to public from traffic Refinery emissions very low (but can and will be reduced further)

33. VOC’s and Benzene (1) – Where we are • Major reduction in VOC emissions from the refinery • MPP data show fenceline benzene levels lower than traffic emissions • Concern about Settlers school levels (measured levels higher than at Engen fenceline)

34. VOC’s and Benzene (2) VOC emission reductions

35. VOC’s and Benzene (3) • Photos of VRU at Wentworth Road loading

36. VOC’s and Benzene (4) Covers on Effluent treatment plant and Vapour Recovery unit (example of BAT)

37. VOC’s and Benzene (5) Ambient monitoring data:

38. VOC’s and Benzene (6) Passive Sampling Locations Main Gate Admin Gate Southern Works Rec Club Southern fence line Settlers School Mosque

39. Stakeholder Relationships / Escalating Expectations • Government • Local Community • Employees • Shareholders

40. National Government / DEAT • Aiming for very tight standards • Not enough engagement • Concern about standards implementation process / transitional arrangements • Recent indications of confrontational approach vs constructive approach • Technical capacity limitations • Support for MPP (Which they initiated)

41. Provincial Government / DAEA • EIA process limitations • Outstanding Appeals

42. Local Government (City Health Dept.) • Strong technical capacity via MPP • Concerns about implementation of new permit process • Strong working relationships

43. Local Community • Many Good leaders • Liaison forum • Lack of constructive engagement from some NGO’s : Misinformation / hidden agendas

44. Employees • Majority from local community – under unfair pressure • They don’t come to work to cause environmental / health problems • They feel hurt when unfounded accusations are made

45. Shareholders • Have always supported our improvement plans • Fact based decisions (not emotive) • Prioritized • Limited resources • Credibility loss as a result of leading edge technology failure

46. How can Government help? • Science and Facts; not emotions • Work with us • Assist us to make best use of limited resources • Give us adequate time • Level playing field • Understand the issues • In Summary; You can help, we need your help !

47. Summary – The way foward • We are committed to working with the facts and getting off the “radar screen” • Prioritised road map for the future

48. Thank You