Challenges facing capacity in the supply

of bitumenBasil JonssonTotal Oil SA

Overview• Bitumen demand• Bitumen manufacturing• Bitumen manufacturing capacity• Factors influencing future supply

Refinery

Transporting

Mixing

Drumming

Storage

Spraying

Supply Chain

Annual global bitumen demand in 2000

35

23.5

22

5.5 5 1 1

N AmericaEuropeAsiaFSUC & S AmericaAustralasiaAfrica

Global consumption +- 103 million tons (RSA = 0.25%)

RSA bitumen demand vs road expenditure

Bitumen volumes and Prov and Nat road expenditure

180000

200000

220000

240000

260000

280000

1998 1999 2000 2001 2002 2003 2004 2005

Bitu

men

vol

umes

(ton

s)

2500

3000

3500

4000

4500

5000

5500

6000

6500

Roa

d Ex

pend

iture

(Rm

200

0)

Bitumen

Road expenditure

Bitumen manufacture

• Bitumen is 100% locally manufactured product

• Produced from the residue of crude distillation

• 100% of the crude is imported• 75% of the crude is refined into white fuels

eg petrol, diesel etc• The residue not used for bitumen

manufacture is further processed as bunker fuel oil (coastal refineries)

Petroleum products

LPG

Petrol

Paraffin

Diesel

Lubricants

Heavy fuel oil

Bitumen

Distillation of crude oil produces:

Bitumen is +- 2.5% of crude oil consumption

Typical bitumen manufacture

Heavycrudes

VacuumDistillation

AtmosphericDistillation

Hard

Soft

Bitumen grades

AirBlowing

Bunker FuelOil

Crudes suitable for bitumen

1500 known crudes1500 known crudes100 suitable for bitumen100 suitable for bitumen

0

20

40

60

80

100

Vittorio

Bachaq

uero

Safan

iya

Kuwait

Iran L

TQat

ar

Gippsl

and

Gas & Gasoline

Kerosine

Gas oil

Vac distillate

Bitumen (200 pen)

Variability of crude oil

Bitumen supply in Southern Africa

Gaborone

Windhoek

Johannesburg

Mossel Bay

Saldanha

Cape Town

Pretoria

Mbabane

Maputo

East London

Port Elizabeth

RichardsBay

Durban

Bloemfontein

Kimberly

MaseruPofadder

Messina

Pietersburg

Crude oilrefinery

Sapref

Calref

Enref

Natref

Synfuelplant

Mosgas

Secunda

Sasol

Sasolburg

Production capacity

RefineryCrudeBbls/day

BitumenTons/day

Bitumen% crude

Calref 100,000 500 3%

Enref 120,000 1000 5%

Natref 100,000 500 3%

Sapref 180,000 600 2%

Production capacity cont…

• Production capacity exceeds local demand– 262,000 ton demand in 2005 vs

780,000 ton/annum production capacity– Therefore RSA is a net exporter of

bitumen +- 150,000 ton/annum

Factors influencing bitumen supply

• Growth in fuels demand vis-à-vis bitumen will result in :– Increased refinery throughput

(debottle necking vs expansion)– Increase in quantity of residue– More bitumen available– Increase in visbreaking of

vacuum distilled residue for fuels

– Increase demand for lighter crudes

– Investment in coking plants

Factors influencing bitumen supply

• Environmental compliance will result in :– Cleaner fuels – Increase demand for low sulphur

crudes– Investment in

• desulphurisation units for fuels refining

• dedicated bitumen non fuels refining

– Lower fuming bitumen technology– Replacement of coal tar binders

with bituminous binders

Factors influencing bitumen supply

• Tankage and loading capacity at refineries– Road tanker congestion

at peak demand– Delays incurred due to

testing reduce turnaround time of tankage

– Blending & dispatch facilities configured for JIT

• Ageing work force– Diminishing skills and

experienced operators– ‘Right first time’

production

Factors influencing future bitumen supply

• End consumer requirements with respect to:– Performance grade specifications eg

SHRP– Compatibility requirements of secondary

producers with polymers and modifiers– Hard penetration grades for high

modulus asphalt– Blending of volatile cutback bitumen

Conclusion

• RSA has the manufacturing capacity to exceed the local demand for bitumen into the foreseeable future

• There is no known reason to believe that this situation should change