PRESENTATION TO JOINT PARLIAMENTARY PUBLIC HEARINGS
ON THE STATE OF READINESS FOR THE 2010 FIFA WORLD CUP
18 – 19 MAY 2010
OUTLINE OF PRESENTATION
INTRODUCTION
THE CHALLENGES AND ROLE OF TRANSNET PIPELINES
THE CHALLENGES AND ROLE OF TRANSNET FREIGHT RAIL
THE COMMITMENT OF TRANSNET NATIONAL PORTS AUTHORITY
CONCLUDING REMARKS
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THE CHALLENGES AND ROLE OF TRANSNET PIPELINES
(“TPL”)
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THE ROLE OF TRANSNET IN JET FUEL LOGISTICS IN SOUTH AFRICA
Transnet Limited (Transnet”) through its divisions Transnet Freight Rail (“TFR”) and
Transnet Pipelines (“TPL”)) is primarily involved, in respect of the Fifa World Cup 2010 (“WC2010”)
process with the supply of jet fuel to the O R Tambo International Airport (“ORTIA”), - all other airports are supplied by road, except Port Elizabeth Airport and the former Durban International Airport which
are supplied by pipelines owned and operated by members of the oil industry.
The supply of jet fuel to ORTIA is complex and involves many role players:
SA oil industry (as producers or importers of the fuel);
Transnet as transporter of fuel from two different points of supply, as required by the
International Association of Travel Agency (“IATA”), for security of supply reasons;
OR Tambo Airport Fuel Supply (“ORTAFS”), agent of the oil industry, which is currently
managed by Chevron; and
The Airports Company of South Africa (“ACSA”).
The total requirement for ORTIA jet fuel supply are as follows:
The current demand is 4,5 million litres per day (“Ml/day”), thus the supply system is required
to deliver 33 million litres per week (“Ml/w”);
This demand is anticipated to rise to over 10Ml/day on peak days during the FIFA World Cup 2010 (“WC2010”); and
At present and also for the WC2010 period, stock levels of the jet fuel can not go below a 3 days requirement (ACSA stipulation).
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2010/11 Demand Forecast
Refined Products 5.1 bl/a
C-Zone
Total RequirementNATREF REFINERY
Sasol, Total
COP
RefinedProducts
4.9 + 0.3 bl/a
15.9 bl/a
DJPRail &Road
SECUNDAREFINERY
Sasol
Diesel in Crude(DIC) 0.3 bl/a
Crude Oil
RefinedProducts 4.4
bl/a
Rail & Road Slippage1.2 bl/a
5.4 bl/a
DURBAN COMPLEX
ENREF Rail & RoadENREF
REFINERYEngen
SAPREFREFINERY
BP, ShellSAPREF
Loading
BERTHS (5,6,7,8,9) IMPORTS
DJP – Durban Johannesburg Pipeline
COP – Crude Oil Pipeline
Pipeline feed
Pipeline feed
FUEL SUPPLY CHAIN LOGISTIC AND MARKET ANALYSIS WITH VOLUME
TARGETS : C-ZONE
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ORTIA Complex (ACSA)1
ORTAFS2
NATREF REFINERYSasol, Total
Requirement22 Ml/w
Swing supply to ensure Transnet meets average
requirements – currently10 Ml/month
DURBAN COMPLEX
DJP3
ENREF
Total Requirement33 Ml/w
Rail Loading
Requirement11 Ml/w
Rail Off Loading
ENREF
REFINERYEngen
SAPREF
REFINERYBP, Shell
SAPREF
BERTHS (5,6,7,8,9)1 Airports Company of SA IMPORTS
2 OR Tambo Airport Fuel Supply3 DJP – Durban Johannesburg Pipeline (12")
DIAGRAMMATIC LAYOUT OF COMPLEX SUPPLY CHAIN FOR JET FUEL TO OR
TAMBO INTERNATIONAL AIRPORT
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POTENTIAL JET FUEL LOGISTICS CHALLENGES DURING THE FIFA WORLD
CUP 2010
Typical issues that can, in general, cause disruptions in the supply chain include:
Production problems (availability of product) at the 4 refineries involved;
Product quality at points of entry into transport/logistics system (local production and imports);
Loading challenges at points of entry for TFR;
Challenges of transportation by rail and pipelines;
Off-loading challenges at ORTIA; and
Available storage capacity at ORTIA.
Other more specific issues that play a role in disruptions or delays in such a chain are:
ESKOM power interruptions and reliable power supply;
Weather conditions (cannot load Rail Tank Cars (“RTCs”) in the rain in Durban;
Cable theft challenges for TFR and TPL;
Faulty equipment and system failures;
Commercial arrangements (contracts of supply) between SA Oil Industry members; and
Personnel issues throughout the chain (skills, availability, etc).
Absolute requirements for such a complex system are:
Excellent communication and reporting;
Co-ordinated team-effort by all role players; and
Strong leadership through the Department of Energy (“DOE”).
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• Present expectations of demand for period of WC2010:
• Total additional volumes of jet-fuel required at ORTIA : Range between 46 and 107 million litres.
• Combined petrol and diesel additional demand in Zone C : 23 Million litres.• Petrol and diesel volumes displaced by jet-fuel in the DJP, which require additional logistics
capacity from the coast, range between 138 and 45 million litres.
• Transnet’s high level actions to meet requirements for jet fuel to ORTIA and additional petrol and diesel capacity from the coast are:
• Ensure 24 Ml/week transported by TPL from Natref to ORTIA by the dedicated pipeline every week during WC2010.
• Ensure 14Ml/week transported by TFR between Durban and ORTIA by rail every week during WC2010.
• Transport 10Ml/week of jet fuel through the DJP from Durban every week during WC2010 (presently 5Ml/month on average).
• The above actions will ensure more than sufficient capacity for jet fuel in the low level case and will leave only 9Ml/w short over the whole period for the high level case (one extra slug of 10Ml in the DJP over the 8 week period).
• For additional capacity needed for petrol and diesel from coast, 2 slugs of diesel or petrol in the crude oil pipeline (1 per month) are proposed, which will be sufficient for the requirements of a low level case (DIC/PIC initiative).
• For the volumes required for the high level case, attempts to be made by TFR, TPL (ex Secunda; Natref) as well as all round stock-piling initiatives (TFR spare RTCs; TPL tankage as well as stock piling with all other roleplayers) to achieve required capacity. As final fall-back only: to increase present road transportation. 8
SUMMARY OF WC2010 CHALLENGES AND WAY FORWARD
THE CHALLENGES AND ROLE OF TRANSNET FREIGHT
RAIL (“TFR”)
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TRANSNET FREIGHT RAIL CAPACITY BREAKDOWN:
DURBAN/ORTIA
Installed capacity = 18 Ml/w
Being tested till end May 2010
Operational capacity = 16 Ml/w
Realistic supply = 14 Ml/w
Simulation model assumes this performance
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TRANSNET FREIGHT RAIL JET FUEL FLOWS AT TIME OF WC2010
Possible Supply1.8 Ml/w Matola (Mozambique)
IsandoRequirement
14 Ml/w
BloemfonteinRequirement
0.58 Ml/w
Durban
Loading site Off-loading site
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BUT TRANSNET FREIGHT RAIL’S CURRENT SUPPLY CHAIN CAPABILITY HAS
CONSTRAINTS
ORTIA – can offload at best 40 RTCs per day
(DAY shift only)BOTTLENECK
RAIL – can move 2 x blocks of 39 RTCs per day
SAPREF/ENREF – can load 64 per
day (32/32 split)NO CANOPIES
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www.transnet.net
ORTIA JET FUEL PERFORMANCE (Week 50-06)
10,707
10,699
10,538
12,110
3,886
8,666
9,455
6,039
9,881
RTC offloaded
Act Lt on Rtc
Average days stock
117 RTCs on hand – ISO
227 RTCs on hand
87 RTCs on hand
High stock level at ORTIA ;changing filters, 28 RTCs on hand at Isando, 32 en route
To decant 32 today (14th). High stock level
48 RTCs on average under load on hand.
Wk 5 264 16356 6.4
Wk 4 170 11177 4.6
Wk 3 160 9743 5.2
Wk 2 114 6800 6.3
Wk 1 242 14951 5.9
Wk 52 160 9881 6.4
Wk 51 173 10707 7.1
Wk 50 176 10699 7
Wk 6 8.214286184
RTC offloaded
Act Lt on Rtc
Average days stock
T1518 arrived 10h50am with 28 RTC in Isando
Shortage of product at loading end caused shortage of loaded RTCs at ORTIA
T1518 Delayed due to cable theft along the Natcor
Customer did not operate on 18 April. As of the morning of 19 April 10, 82 Loaded RTCs on hand with 59 loaded RTCs en-route to Isando
26 April only one shift was working. 29 April 64 RTCs could not be shunted by TFR due to diesel failure
1 May – tanks are full so only 16 RTCs were offloaded
2 May – ORTIA did not work
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ACTIONS PLANS
Standby crew slots were increased from 25 February 2010 to ensure crew
delays are eliminated.
Shunts at Loading and Offloading ends for jet fuel have been enhanced to
ensure no shunt delays are experienced.
Jet fuel RTCs are being increased from the current fleet of 313 to as follows: -
Target date: 14 April 2010 = 321 RTCs
Target date: 30 April 2010 = 381 RTCs
Target date: 28 May 2010 = 433 RTCs
CHALLENGES
Security incidents and network unavailability remain a major threat to the service we
provide. This leads to reductions in orders.
Product availability at the loading end.
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THE COMMITMENT OF TRANSNET NATIONAL PORTS
AUTHORITY (“TNPA”)
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TRANSNET NATIONAL PORTS AUTHORITY MARINE SERVICES TO
VESSELS
• Vessels entering the port require ISPS (“International Ship and Port Security Code”) clearance before
TNPA will allow them vessel to enter a port;
• Vessels must also request a pilot, tug assistance and berthing assistance before entering a port;
• The normal procedure is:
• Vessels submit an arrival notice 72 hours prior to arrival;
• TNPA generates a 72-hour planning list;
• Vessels confirm arrival 24 hours prior to arrival;
• TNPA generates a 24-hour planning list; and
• Vessel movement is confirmed 4 hours prior to service when scheduling commences to
provide marine services to the vessel.
• Vessel service priority is determined based on first come first served requests;
• When multiple service requests are received for the same time, priority is determined as
follows:
• Navy and Passenger vessels;
• Container Vessels and Car Carriers; and
• All other vessels.
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TRANSNET NATIONAL PORTS AUTHORITY MARINE SERVICES TO
VESSELS DURING THE FIFA 2010 SOCCER WORLD CUP
• Vessels will be expected to adhere to the same ISPS and Marine Service request procedures which
facilitate proper and controlled planning of movements in/out of the port;
• No special prioritisation procedures will be applied;
• The Harbour Master has the final authority over vessel movements in the port and must be
approached in all events where vessels may require urgent service;
• The Harbour Master will assess the situation at the port and make the final decision – this is the
normal process followed to deal with urgent vessel calls; and
• The 72-hour and 24-hour planning lists provide a mechanism to assess the situation at the port and
inform the Harbour Master’s decision-making.
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CONCLUDING REMARKS
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• Transnet has made additional investment by increasing its fleet of jet fuel RTCs from the current
266 to 400 by mid-May 2010, to ensure that South Africa hosts a successful event.
• Transnet has committed 32 RTCs to be used as backup storage during the FIFA World Cup 2010.
• One load of 32 RTCs will run once a week from Durban to Hamilton to feed Bloemfontein and Kimberley
airports only during the World Cup.
Jet fuel, including Diesel displacements in the pipeline and block trains from sourcing points will
enjoy absolute freight priority second only to passenger trains on the Durban Johannesburg Corridor.
• Fuel vessel prioritisation at the Port of Durban will be dealt with without compromising other
economic activity in the country during this period.
• Transnet as a key fuel logistics supplier for South Africa remains committed to obligation to safeguard
the security of supply of petroleum products to ensure South Africa’s
successful hosting Fifa World Cup 2010.
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CONCLUSION
• General suggestions for the FIFA World Cup 2010 risk mitigation in respect of stock-outs include:
• DOE minimising adjustments (increases or decreases) in fuel prices in South Africa
during the 3 month period (May, June, July).
• Commercial issues:
All available tank-space should be declared by all role players (TPL included) and used for
stocking-up purposes before the FIFA World Cup 2010. National Energy Regulator of
South Africa could play a critical role in this regard.
• Stock management:
Managing stock at ORTIA should be improved with the use of a computer-based
simulation model. Transnet has funded the development of this
computer-based simulation model, which will improve the management of
stock at ORTIA during the FIFA World Cup 2010.
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CONCLUSION
THANK YOU