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PRESENTATION TO THE PRESENTATION TO THE PORTFOLIO COMMITTEE ON PORTFOLIO COMMITTEE ON
MINERALS AND ENERGYMINERALS AND ENERGY
PETROLEUM PIPELINES BILLPETROLEUM PIPELINES BILL
[B22-2003][B22-2003]
BY: CHARL MBY: CHARL MÖÖLLERLLER& JOHN MORGAN& JOHN MORGAN
4 JUNE 20034 JUNE 2003
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
CONTENT OF PRESENTATION
1. PETRONET’S VIEW ON REGULATION
2. NATIONAL PORTS AUTHORITY COMMENT ON BILL
3. PETRONET SPECIFIC COMMENTS/QUERIES/ SUGGESTIONS ON BILL
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
PETRONETS VIEW ON REGULATIONPRINCIPLE NOT OPPOSED - PARTICIPATED IN THE PROCESS(SEVERAL WORKSHOPS) SINCE 2000.COMMENTED ON DRAFT BILL IN 2001.
INTERNATIONAL NORM
PRESENT COMMERCIAL REGULATION AND AGREEMENTS HIGH RISK
SETS STANDARDS
OFFERS PROTECTION AGAINST POSSIBLE UNFAIR COMPETITION FROM FUTURE PIPELINES OF LOWER STANDARDS
CERTAINTY ON RULES FOR FUTURE PUBLIC AND PRIVATE INVESTMENTS
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
PETRONETS VIEW ON THE BILL
MAIN IMPACT: COMMERCIAL ASPECTS OF PIPELINING
TARIFFS, CONDITIONS OF CONVEYANCE, FINANCIAL REPORTING, ETC.
TECHNICAL, HEALTH, SAFETY, ENVIRONMENT COVERED IN VARIOUS PIECES OF EXISTING LEGISLATION
BUT: OPERATING COMPETENCIES NOT ADDRESSED IN THE BILL
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
PETRONETS VIEW ON THE BILL
STRATEGIC ROLE OF PETROLEUM PIPELINES IN SA AKNOWLEDGED
SUSTAINABLE BUSINESS ENVISAGED
LOW RISK OF REGULATION BEING DISRUPTIVE TO PRESENT PIPELINE NETWORK OR LEADING TO UNSUSTAINABLE SITUATION
WILL ENHANCE THE COMMERCIAL MANAGEMENT AND FUTURE DEVELOPMENT OF PIPELINE INFRASTRUCTURE
RULES SPELT OUT
INVESTMENT, RETURNS, TARIFF POLICY
PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
NATIONAL PORTS AUTHORITY COMMENT
DEGREE OF OVERLAP BETWEEN THE POWERS OF THE NATIONAL PORTS AUTHORITY IN TERMS OF THE NATIONAL PORTS AUTHORITY BILL (B5-2003) AND THE PETROLEUM PIPELINES AUTHORITY
CONSTRUCTION AND OPERATION OF MARINE LOADING AND STORAGE FACILITIES
SBM / BERTHS / ETC ?
THIS POSITION TO BE CLARIFIED
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONS
Section 20 - Conditions of licence
20 (1) (d) This clause in Petronet’s opinion is restrictive on existing pipelines and has the potential to create inefficiencies and artificial capacity constraints within an existing integrated pipeline network. It will be far more efficient to convey refined products through a crude oil pipeline which has surplus capacity then to provide additional refined pipeline capacity.
Optimal utilisation of very expensive (Capital Intensive) existing pipeline capacity must be allowed for. Not only
under emergency conditions.
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
PETRONET PIPELINE NETWORK DEVELOPMENT
2. 1965 - MULTI PRODUCTS PIPELINE (DJP): DURBAN – JOHANNESBURG
3. 1970 - CRUDE OIL PIPELINE (COP): DURBAN – COALBROOK (NATREF) – KENDAL
4. 1973 - MULTI PRODUCTS PIPELINE (EXTENSIONS)PRETORIA, BENONI, KLERKSDORP
- AVIATION TURBINE FUEL PIPELINE (AVTUR)
COALBROOK – JOHANNESBURG INTERNATIONAL AIRPORT
4. 1978- NEW MULTI PRODUCTS PIPELINE (DWP): DURBAN – ALBERTON (VIA SECUNDA)
CRUDE OIL RETURN PIPELINE (KDC): KENDAL – VREDE
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
PETRONET PIPELINE NETWORK DEVELOPMENT
5. 1993- MULTI PRODUCT PIPELINE EXTENSION: LANGLAAGTE -
RUSTENBURG
6. 1995- NETWORK RECONFIGURATION (COP/DWP) TO INTRODUCE GAS:
SECUNDA – DURBAN
7. 2002- UPGRADE CRUDE OIL PIPELINE CAPACITY: DURBAN –
COALBROOK (5 ADDITIONAL PUMP STATIONS)
8. 2004- DEBOTTLE NECK MULTI PRODUCTS PIPELINE:SASOLBURG - ALRODE
PPT-0591
1965 - MULTI PRODUCTS PIPELINE (DJP):
DURBAN – LANGLAAGTE
1970 - CRUDE OIL PIPELINE (COP):
DURBAN – CBK – KENDAL
PPT-0592
PPT-0593
1973 - MULTI PRODUCTS PIPELINE (EXTENSIONS): PRETORIA, BENONI, KLERKSDORP
AVIATION TURBINE FUEL PIPELINE (AVTUR): COALBROOK – JOHANNESBURG INTERNATIONAL AIRPORT
1978 - NEW MULTI PRODUCTS PIPELINE (DWP): DURBAN – ALRODE (VIA SECUNDA)
CRUDE OIL PIPELINE (KDC): KENDAL – VREDE
PPT-0594
PPT-0595
1993 - MULTI PRODUCT PIPELINE EXTENSION: LANGLAAGTE - RUSTENBURG
1995 - NETWORK RECONFIGURATION (COP/DWP): SECUNDA – DURBAN
PPT-0596
2002 - UPGRADE CRUDE OIL PIPELINE CAPACITY:
DURBAN – COALBROOK (5 ADDITIONAL PUMP STATIONS)
DOUBLE PUMP STATION
DELIVERY STATIONS / METERS
PUMP STATIONS
REFINED PRODUCTS
CRUDE OIL
GAS
AVTUR INDIANOCEAN
DURBAN
HOWICK
LADYSMITH
BETHLEHEM
VOLKSRUST
NEWCASTLEKROONSTAD
KLERKSDORP
POTCHEFSTROOM
WITBANKKENDAL
WALTLOOPRETORIA WEST
SECUNDA
STANDERTON
ALRODE
COALBROOKSASOLBURG
SCHEEPERSNEK
MAHLABATINI
HILLCREST
TARLTON
LESOTHO
NATAL
FREE
STATE
GAUTENG
ø457,2
ø406,4ø323,8
QUAGGA
ø457,2
N
RUSTENBURG
MAGDALA
NORTH - WESTMPUMALANGA
KWAZULU /
AIRPORT
VRYHEID
RICHARDS BAY
CAPE TOWN
DURBAN
GAUTENG
SOUTH AFRICA RICHARDS BAY
PPT-0597
( 18" )
( 16" )( 12" )
( 18" )
ø457,2( 18" )
ø406,4( 16" )
BHT
INTAKE STATIONS
AFRICA
MEYERTON
MNGENI
VAN REENEN
LESOTHO
SECUNDA
DUZI
INGOGO
WILGE
LANGLAAGTE
FORT MISTAKE
EMPANGENI
VREDE
MOOIRIVER
2004 - DEBOTTLE NECK MULTI PRODUCTS PIPELINE:2005 SASOLBURG - ALRODE
DOUBLE PUMP STATION
DELIVERY STATIONS / METERS
PUMP STATIONS
REFINED PRODUCTS
CRUDE OIL
PROPOSED CHANGES
REQUIRED CHANGES LDC INDIANOCEAN
DURBAN
HOWICK
LADYSMITH
BETHLEHEM
NEWCASTLEKROONSTAD
WITBANKKENDAL
WALTLOOPRETORIA WEST
SECUNDA
STANDERTON
ALRODE
COALBROOK
HILLCREST
TARLTON
LESOTHO
NATAL
FREE
STATE
GAUTENG
ø406,4ø323,8
QUAGGA
ø457,2
N
RUSTENBURG
MAGDALA
MPUMALANGA
KWAZULU /
AIRPORT
RICHARDS BAY
PPT-0574
( 16" )( 12" )
( 18" )
( 18" )
( 16" )
BHT
MNGENI
VAN REENEN
DUZI
WILGE
LANGLAAGTE
FORT MISTAKE
VREDE
MOOIRIVER
“T”
VREDE
NIGELSASOLBURG
NATREF
EX COAST
NEW PIPELINE
VREDE “T” PIGGING STATION
JAMIESON PARK PIGGING STATION
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONS
Section 27 - Health, Safety, Security and Environment
The Bill is lacking with respect to the issue of pipeline security. Petronet currently experiences major difficulties in managing the activities of 3rd parties both in and adjacent to its pipeline servitudes. Encroachments by informal developments as well as the increasing number of encroachments inadvertently approved by various local
authorities pose a major risk to health and safety the environment as well as the disruption of the essential services. Consideration should be given to including enabling legislation in this Act
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SECURITY OF PIPELINES
PIPELINES DESIGNED, CONSTRUCTED, OPERATED AND MAINTAINED IN ACCORDANCE WITH PROVEN INTERNATIONALCODES ARE SAFE AND SECURE BURRIED INSTALLATIONS
OPERATIONSADEQUATE MONITORING AND CONTROL SYSTEMS
INFRASTRUCTURE INTEGRITYPREVENTIVE MAINTENANCESERVITUDE MANAGEMENT
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SECURITY OF PIPELINES:SERVITUDES
HIGH RISK FROM 3RD PARTY ACTIVITYPHYSICAL DAMAGE
ILLEGAL ENCROACHMENT/ACTIVITIES IN SERVITUDES- COMPLEX AND TIME CONSUMING PROCESS TO STOP OR REMOVE
ACTIVITIES ADJACENT TO SERVITUDE AFFECTING INTEGRITY OF PIPELINE
PIPELINE OWNER HAS NO JURISDICTION BEYOND THE SERVITUDE LIMIT
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONS
Section 34 - Prohibition of agreements contrary to Act
34 (1) It is not clear from this clause whether existing agreements will be dealt with in terms of 34 (2) or 20 (1) (f) (ii).
EXAMPLE:
Tariff link agreement - Petronet/Natref
•3 Year Termination Clause
Current Conveyance Agreement – Petronet/SA Oil Industry members
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONS
Section 22 - Term of Licence
22 (5) It is recommended that this clause be amended to make provision for the transfer of a licence in the case of State owned entities. A possible mechanism for this is the Transnet Legal Succession Act.
EXAMPLE: TRANSNET (THE LEGAL ENTITY)WILL NEED TO HOLD THE LICENCE. NOT PETRONET - THE PIPELINE BUSINESS ……..
PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONSDefinitions
Pipeline - This is a very broad definition based on product type.
Consider other possible parameters such as diameter, length, pressure, etc
Section 10 - Decisions of Authority
Recommend the“right of appeal” be included as per 25 (3).
Section 15 - Licences
15 (1) Recommend “person” be replaced with “owner”.
This will clear up any uncertainty as to who the licencee is.
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONS
Section 16 - Application for licence
16 (2) (c) Given the importance it is considered essential that applicants also be required to demonstrate their “Operating” abilities.
16 (3) It is requested that the following be considered.
The Authority will at all times adhere to the requirements of the “Access to Information Act” in terms of obtaining/using/controlling and making public any information obtained from any applicant .
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONS
Section 18 - Particular Information to be supplied by the applicant
18 (a) This clause is unacceptable unless:
i) no additional costs are incurred by the licensee, or
ii) the authority makes provision for such additional costs when approving tariffs.
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONS
Section 20 - Conditions of licence
20 (1) (f) (i) In order to comply with this requirement customer “needs” will have to be defined within the Act. Capacity not the only consideration in a pipeline.Consideration to be given to Technical and product compatibility, minimum batch (slug) sizes, frequency of utilisation, etc. Suggested change is to include the following:
“…………………to their needs and within the operational constraints of the pipeline system/network”.
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONS
Section 20 - Conditions of licence
20 (1) (r) & (s) Why tariffs would be set by the Authority for petroleum pipelines and only approved for storage facilities is not understood.
20 (2) (a) to ( C) : Should the right to appeal as allowed for in 25 (3) (2) not also be included in 20 (2)?.
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONS
Section 21 - Non-discrimination
The terms “objectively justifiable” and “identifiable” are inadequately descriptive and need to be expanded to ensure compliance with this requirement
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONS
Section 24 - Revocation of licence on application
24 (2) It is unreasonable to expect an uneconomical business to continue for 12 months after notice.
Suggest that the period of notice on licensed activities be reduced from 12 months to 3
months in the case of uneconomical services and 6 months for any other reason
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PETROLEUM PIPELINE BILLPETROLEUM PIPELINE BILL
SPECIFIC COMMENT/QUERIES/SUGGESTIONS
Section 27 - Health, Safety, Security and Environment
This clause has indeterminable financial and legal liabilities for an undefined period. In order to facilitate and encourage investment, parameters will need to be fixed or limited.