sahara energy in south sudan...2018/11/02 · country information background: south sudan is one of...
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CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of Sahara Group Limited is strictly prohibited
Sahara Energy in South Sudan
Presentation by Valéry Guillebon
November 2018
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Investment Opportunities in South Sudan
ContentSahara Energy & The East African Market
The Future of South Sudan
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§ Business operations in East Africa span themidstream and downstream value chainincluding; lifting and trading of crude, andthe trading, importation, storage, retail anddistribution of refined petroleum products.
§ We operate through our Dar Es SalaamHub through which we service our diversecustomer base in Zambia, DRC, Rwanda,Burundi, Malawi, Uganda, etc. Moreopportunities are also opening up in Kenyaand Mozambique.
§ In South Sudan, we are now a crude lifterthrough a pre-financing agreement signedwith the Minister of Petroleum. Our aim isto develop and increase our crude lifting inthe coming year.
Sahara Energy is a private petroleum product trading and marketing company committed to ensuringservice excellence in the provision of petroleum products in the East African region.
Overview
Operational Locations
Tanzania
South Sudan
Zambia
Mozambique
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§ Sahara is one of the topsuppliers of petroleumproducts in East Africa,delivering between150,000MT and 200,000MTof Gasoline, Diesel and JetFuel per month.
§ East Africa, with a GDPgrowth of 5.9% recordedthe continent’s besteconomic performance in2017 above the continentalaverage of 3.6%. EastAfrica’s GDP is expectedto continue growing with aforecast of 6.2% in 2019according to the AfricanDevelopment Bank.
East Africa, with the highest GDP growth expectations on the continent, will experience a significantincrease in demand for petroleum products in the near to medium term…
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120112,0
Kenya0,00,8
Ethiopia
51,4
Mozambique1,1
Tanzania Sudan1,0
Zambia
26,5
20,8
70,8
17,7
18,5
51,3
74,3
45,2
25,7
6,9
7,916,6
25,9
34,7
19,7
30,8
53,4
8,1
Gasoil Gasoline Jet Fuel
2017 Product Demand by Country in East Africa
‘000 barrels per day
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…driven by gasoline growth which averaged 7% growth per annum over the last three years in theregion which is expected to continue.
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+7%
WAF ForecastEast AfricaEAF Forecast
West Africa
Monthly Regional Gasoline Demand (‘000 barrels per day)
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t Afr
ica
Eas
t Afr
ica
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Sahara Energy is a key supplier of products into several East African countries and is in the processof exploring other investment opportunities in the region
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Imports Sahara Share
Sahara’s Share of Imports Into Kenya (‘000 MT)
§ Sahara has a significant market share in these East Africancountries and is working to increase its presence across the regionin both the oil and gas, power and infrastructure sectors.
§ Sahara Group through its affiliates and subsidiaries is activelyinvolved in the oil and gas sector in Zambia, Democratic Republic ofCongo, Rwanda, Burundi,Malawi, Uganda,Kenya andMozambique
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Tanzania Tender- Sahara Deliveries (‘000 MT)
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BurundiDR Congo
UgandaMalawiRwanda Zambia
Tanzania
Sahara’s East African Deliveries in 2018 (‘000 MT)
Imports Sahara Share
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Investment Opportunities in South Sudan
ContentSahara Energy & The East African Market
The Future of South Sudan
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§ East Africa is very different from West Africa in terms of logistics andinfrastructure. Only 3 to 4 big ports (Dar Es Salaam, Tanzania; Mombasa,Kenya and Beira, Mozambique) can accommodate HR bulk of the import inthe continent, making logistics tricky to handle.
§ Products are moved from the coastal regions into the hinterland via “trucking”in over 75% of cases. While trucking has served the region for many years, ithas created multiple environmental and congestion issues. That is, trucking ofpetroleum products has worsened the condition of roads, resulted in safetymishaps and increasedprices ofalready expensive fuel across theregion.
§ For example, 5,500cbm of products move via pipeline between Beira,Mozambique and Harare, Zimbabwe daily and using the pipeline savesapproximately $50/CBM. Reducing both costs and risks is a significantincentiveto use the pipeline .
§ Cooperation between multiple countries within the region will ensure thatthe cost of developing required infrastructure is minimized and the potentialbenefits and scale maximized. Example is the TAZAMA pipeline betweenDar Es Salaam in Tanzania and Ndola in Zambia which supplies comingledcrude to theIndeni refinery.
§ Other examples include The West African gas pipeline (WAGP) thatinterconnects Nigeria,Benin Republic, Togo and Ghana
§ Possible opportunities exist for South Sudan to partner with neighboringcountries to facilitate crude oil evacuation and receipt of petroleum products.
Synergies between East African countries will drive the development of oil, gas and powerinfrastructure across the region in a more cost-effective fashion
Tazama Pipeline (Dar Es Salaam, Tanzania to Ndola, Zambia)
West African Gas Pipeline (Nigeria, Benin, Togo and Ghana with planned expansion to Cote d’Ivoire
Key Notes
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Some Existing and Potential Pipelines in East Africa
Source: https://worldview.stratfor.com/article/east-africas-pipeline-potential
Development of additional infrastructure will facilitate South Sudan’s growth and economicdevelopment and reduce pressure on existing infrastructure.
§ The development of new crude oil and product pipelines into South Sudan will;
§ Speed up the economic growth of the country by reducing the landing cost and pump price of petroleum products
§ Reduce reliance on trucking for product availability
§ Reduce pressure exerted on road infrastructure due to trucking
§ Reduce safety mishaps associated with trucking
§ Increase overall quality of life by reducing emissions and pollution, eliminating product shortages and ensuring overall efficiency.
Key Notes
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As these synergies drive development, several opportunities will arise in the short to medium term in the downstream, upstream and power sectors in South Sudan.
Country Information
Background:§ South Sudan is one of the newer
countries having attained independence in 2011.
§ 65% of the country’s population is below the age of 25 and the Electrification rate is approximately 1%
Oil Production: • South Sudan produced 350,000bpd of
oil up until 2013 when issues caused a reduction in production to about 120,000bpd.
• The country plans to achieve 210,000bpd of production capacity by the end of 2018.
Expected Opportunities
Downstream:§ Rapid Demand growth in the downstream
sector for refined petroleum products as normal economic activities improve
§ Development of petroleum transportation infrastructure (such as pipelines) as Sudan is landlocked
§ Development of Petroleum Products Terminals and Retail System to Fuel Rising Demand
Power:§ Development of generation infrastructure to
expand base load generation § Development of Power transmission and
distribution infrastructure to ensure electrification of the majority of the populace
Upstream:§ Exploration of greenfield and brownfield oil
assets
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South Sudan’s crude production currently represents 15% of non-OPEC crude production in Africa and a significant portion of crude production in East Africa.
Non-OPEC African Countries Crude Production 2018 (‘000b/d) African Crude Producers Over 100,000 b/d
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1 000
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Alg
eria
Equ
ator
ial G
uine
a
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go
Ang
ola
Cha
d
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pt
Gab
on
Gha
na
Lib
ya
Nig
eria
Sout
h Su
dan
2018 2019
629
71
115
19
63
182
40
193
Cameroon Cote d’IvoireChad EgyptCongo (Kinshasa) Ghana
South SudanTunisia
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The legal framework governinginvestments and private enterprises isstill under development and is subject tosome interference.
This has impacted investor confidenceand caused majority of internationalinvestors to opt for internationalarbitration in all agreements andcontracts.
Years of conflict have resulted in verylittle infrastructure development.Electrification rates are among thelowest worldwide due largely to poorpower infrastructure which has limitedeconomic growth.
Major financial institutions andinternational investors need to continuelending their support to the Republic ofSouth Sudan at this critical time toensure that the expected level ofdevelopment in the nation is sustained.
There is a need for funding thedevelopment of large scale infrastructureprojects. All of these activities willrequire the support of financialinstitutions and all stakeholders acrossthe globe for sustainability.
Developing Regulatory Policies
Limited Infrastructure
Funding
However, several key challenges need to be addressed to ensure sustained economic development and growth in South Sudan
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Investment Opportunities in South Sudan
ContentSahara Energy & The East African Market
The Future of South Sudan
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Growth of the Downstream
Market
Power Generation and Distribution
Growth
OPPORTUNITIES
Crude Oil Demand Growth
Growth of the Downstream Market1
§ Demand growth is expected to occur over the next few years driven by population growth, increased urbanization and the attempts of many African governments to drive industrialization and business growth. In addition, the expected rise in the middle class across the continent will boost growth in demand for fuel. However, refinery operations are not expected to improve significantly in that time and reliance on fuel importation is expected to continue.
§ The demand for fuel in South Sudan with its recovering economy will grow substantially over the next few years and ensuring that petroleum products are readily available locally is essential.
Crude Oil Demand Growth 2
§ Demand for crude oil is expected to increase over the next few years due to expected expansion of the global economy. As growth continues in Asia (especially India) and Africa begins to industrialize, more crude will be needed for refineries to supply the downstream demand for fuels.
§ As a result, demand for South Sudan crude is expected to grow as well.
Power Generation and Distribution Growth3
§ Over 50% of Africa has no access to electricity. These rates are reflected in South Sudan’s 1% electrification rate; a result of the long term conflicts across the country.
§ As economic activities recover, demand for low-cost power will continue to grow and will only be exacerbated by the growth in population. This will create pressure to develop cost-effective power plants
As demand for energy continues to grow in South Sudan, several opportunities are expected to arise in the downstream, upstream and power sectors…
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…with South Sudan leading crude oil production growth against other oil producing countries.
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
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ChinaLatin AmericaOther Asia India
FSUME
OECD
Crude Production Growth (%)
South Sudan Crude
Production Growth (%)
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South Sudan is also expected to experience energy demand growth similar to that of Ghana in the next few years.
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Ghana Gasoline Demand Growth 1986-2014 (‘000 barrels per day)Actual*
Product Demand Growth- South Sudan (‘000 barrels per day)Forecasted
*Source: https://www.theglobaleconomy.com/Ghana/gasoline_consumption/
Refinery Run Rate 2021 -2030Forecasted
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§ Projections of moderately increased refinery runs over the next few years indicates demand for Sudanese Crude will continue well into the future. Consequently this means increased revenue to the country to invest and build the economy.
§ Product demand in South Sudan will be driven by population growth. Population was estimated at 12.6 million people in 2017 and is expected to increase to 15million by 2020.
© Copyright 2018. Sahara Group Limited, Lagos, Nigeria. All rights reserved.
Recipients are not permitted to duplicate the information provided in this Document and to communicate thereceived information to any third party without the prior written consent of Sahara Group Limited.
The Document is incomplete without reference to, and should be viewed solely in conjunction with the oral briefingprovided by Sahara Group Limited.