Page 7 - KZN Business Book Vol.3 No.2

KZN

KwaZulu-Natal
Business Chambers Council
THE SOUTH AFRICAN GAS MARKET

Nkosinathi Solomon - STRUCTURE AND PRICING
Group CEO, SLG
e typical value chain of the gas industry is comprised of upstream, midstream and downstream value chain activities.

Upstream Midstream Downstream
Exploration and Production Transmission and Distribution Trading and CNG
Reticulation
Sasol only Sasol, Transnet, Rompco SLG + 6 Competitors
S

pring
gas transportation.
Midstream is industry parlance
Lights Gas (SLG ) plays in the Transmission Lines absence of viable alternatives for area, an anomalous market seven competitors. SLG trades
distortion.
piped Methane Rich Gas and
downstream segment of the gas for the transportation of gas to Compressed Natural Gas in
value chain trading natural gas customers via transmission and/or Traders such as SLG pay e transmission and KwaZulu-Natal and natural gas in
and compressed natural gas to distribution lines. Usually higher- pipeline taris to Sasol, Transnet distribution taris make up a huge Gauteng. Nersa regulates the
industrial and commercial pressure (greater than 15 Bar and/or Rompco. e National proportion of the total consumer trading of piped gas deriving its
customers across southern Africa. pressure) transmission lines carry Energy Regulator of South Africa gas price sometimes up to 45%. regulatory authority from the Gas
recovered gas to markets. For (Nersa) regulates the taris. For e transportation taris have Act of 2001. is Act empowers
Sasol is a fully integrated gas instance, the Republic of instance, early in 2017, Nersa also been responsible for most of Nersa to approve maximum prices
company in South Africa. e Mozambique Pipeline Company approved an additional tari of the increases in the consumer for gas molecules, regulate
advantages of integration include (Rompco) transmission line R49.87/GJ for Rompco chargeable price of gas over the last 18 discriminatory behaviour within
economies of scale, diversication transports gas from the in accordance with the current months as the molecule prices has the sector and licence various
of economic rents across the value Mozambique’s gas elds to the approved proportional allocation remained stable. erefore, more trading activities. SLG complies
chain, and balance sheet strength. South African market. Rompco is mechanism on all natural gas players especially B-BBEE with all the Nersa regulations and
Upstream activities include a joint venture company between volumes transported through the companies should own assets in routinely submits quarterly
exploration for gas, drilling, Sasol, South African and South Africa to Mozambique this sector to increase reports to the Nersa. Nersa is also
required to enable B-BBEE gas
competition, which is in the
transmission line.
Mozambican governments. It
collection and recovery of gas for enjoys a monopoly position in that interests of gas consumers. Nersa companies to become competitive
transportation to markets. route because there is currently no Distribution Lines alone cannot disentangle the (Section 2(d) of the Gas Act, 2001)
Upstream activities are typically viable alternative to ship natural Distribution lines typically distorted market structure because but the distorted market structure
high risk, capital intensive, high gas from Mozambique to South operate at pressures approximately policy changes may be required to remains an insurmountable
return and require a massive Africa. 2-15 bar ferrying gas mainly to build a competitive and barrier to the success of B-BBEE
balance sheet. In South Africa, industrial consumers. For the transformed industry. companies.
only Sasol successfully participates Within the South African KwaZulu-Natal market, the
in exploration and production geography, methane rich gas is currently unregulated distribution Downstream Activities For more information about the gas,
business activity. Recently, media supplied from Secunda to the taris are roughly 1.18 times the e downstream activities industry go to www.slgas.co.za or
reports have indicated that KwaZulu-Natal market via transmission taris (Sasol and include the trading of gas o call 031 812 0555.
PetroSA (a state owned enterprise) Transnet’s Lily transmission line, Transnet). Sasol owns the entire either the distribution or
had lost circa R14 billion due to which connects to a Sasol distribution infrastructure in transmission grid to gas
unsuccessful gas exploration transmission line within the KwaZulu-Natal on an exclusive consumers or/and the reticulation
intended to augment its own province. Again, Transnet and basis. SLG and other traders and selling of gas to individual
feedstock for the Mossel Bay gas Sasol enjoy a monopolistic cannot own distribution households. is is the most
to liquid renery. position on these routes due to an infrastructure in the exclusive competitive sector with about

NEW OPPORTUNITIES WITH THE BALLITO JUNCTION

MALL UPGRADE

O n the 30th March 2017,
e Robert Group, e
North Coast Courier
and the iLembe Chamber of
Commerce hosted an engaging
and well attended event at the
impressive new Ballito Junction
Regional Mall.

Head of Stanlib's Listed
Property portfolio, Keillen
Ndlovu, shared his expert insights
into the growing trend of online
shopping and how this eects
traditional bricks and mortar
retailers. e panel discussion that
followed unpacked the potential
impact of a large mall like the
Ballito Junction on the region's
economy.
(Photos courtesy of North Coast Courier) Cobus Oloefse, Keith Palmer and Paul de Robillard Pieter Naude, Geraldine Jorgensen and Keillen Ndlovu

Guy Carosin and Russell Bishop Elizabeth Viljoen and Mandy Lidderd Simon Bent and Devin Shutte

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