INDUSTRY

I

Edition 2012/13 051Port of Durban

052 | 054 - EssayNavigating change and oil slicks

055 - Q&AEast Coast Regional Manager, SAMSA

056 - BriefingsWeigh loaded containersR300 billion and some changeNPA tariff increase rejected

Port City PublicationsPort of Durban052

IINDUSTRY

Earlier this year, South Africa’s key interna-tional allies - the US and the European Union (EU) - called on the government to join their oil embargo against Iran.

By not following the West, South Africa could be excluded from the US financial system, resulting in being cold-shouldered on exports, imports, loans and aid. However, if we listen to our 2nd and 3rd largest trade partners, South Africa could be left short of a lot of oil: some 26% of South Africa’s monthly crude imports are currently sourced from Iran.

Throttling supplyOil, diesel and petrol coming through South Africa’s ports and pipelines are crucial to keep the country’s wheels moving, as well as vast parts of the entire continent. Throttling this supply could possibly cause another economic downturn, affecting incomes, jobs and food on the table for families across the nation and large parts of southern Africa.The problem is that finding alternative oil sources to replace Iranian crudes could be

a challenge, says Cape Town analyst Johan Muller of Frost & Sullivan.

‘The most obvious alternative oil sources for South Africa – Nigeria, Angola and Saudi Arabia – have been confirmed by our De-partment of Energy,’ notes Muller. ‘But South African refineries are engineered for a cer-tain oil composition.’

Refineries that currently process Iranian oil will therefore have to adapt in order to process different types of crudes. This could take months and has been estimated to cost USD44 million. This could lead to refineries temporary being unpro-ductive.

The reality is that our broader economy needs constantly working refineries, especially after the frequent and severe un-planned refinery shutdowns in 2011. These impacted on industries relying on refining by-products. Construction – a sector that is already struggling - was for instance affected by bitumen shortages. The shut-down earned public castigation from Min-ister of Energy Elizabeth Dipuo Peters and

WRITERPatricia McCracken

ILLUSTRATIONSacm + Floyd Paul

NAVIGATINGCHANGE ANDOIL SLICKS

PREFACESince 2011 the United States (US) and Europe have been ratcheting up pressure to tighten international sanctions against Iran. For South Africa, everything could be at stake - from oil supplies arriving through Transnet’s ports and pipelines to bread-and-butter issues and national self-esteem.

Essay, Navigating change & oil slicks

Edition 2012/13 053Port of Durban

INDUSTRY

I

Full speed ahead with Mobil Marine LubricantsThe superior performance of Mobil Marine Lubricants like

Mobilgard oils can help extend engine life and deliver peak

performance. Mobil Arma Wire Rope Lubricant, Mobilith

greases and the energy-saving Mobil SHC series provide a

full range of supporting products. For more information call

the Engen Customer Service Centre on 08600 36436 or visit

www.engen.co.za or www.exonmobil.com

DRAF

TFCB

CAP

E TOW

N EN

GE00

0524

/E

drove importation of more than 5 billion li-tres of diesel and petrol.

Impact on Transnet’s MDSTemporary unproductive refineries due to adaptations could result into oil shortages – which could impact Transnet’s rollout of its 2009-2014 National Infrastructure Plan and its ZAR300-billion, seven-year US sanc-tions’ potential (MDS). One of the objectives of this infrastructure overhaul is to increase the throughput of petroleum products by almost sevenfold to more than 20 billion litres.

Also threatened could be the econo-my-boosting intentions of South Africa’s national Infrastructure Plan and even the possible youth policy, which President Zuma punted in June 2012. Ultimately, such economic effects could trickle down to indi-vidual citizens, whether in price increases or job losses.

This, and the fact that South Africa

provides much of sub-Saharan Africa with oil products, has been key to gaining initial American and European sanctions waivers until January 2013.

This does not mean South Africa can sit back and relax. Government has to spend the next months until January 2013 to seek a solution suitable for its own needs that is acceptable to both its traditional trading partners, the EU and US, and its newer allies - China and Russia.

Taking Africa in considerationWith regards to the anti-sanctions BRICS nations, South Africa will also have to keep a close eye on its growing leverage in Africa. These include the close alliances between China and growing powerhouses such as An-gola, Nigeria and Ghana.

Last but not least, the rest of the African continent – in particularly the south-ern part – has to be taken into consideration too. South Africa after all, is not an island on

its own: In 2001, our exports to the rest of Africa amounted R108 billion. Of this, 75% went to Sub Saharan Africa.

High-level sub-Saharan government participation at the 2012 African Renais-sance Conference in Durban - where South Africa’s national Infrastructure Plan was unpacked on a national, regional and con-tinental scale - underlined the high value South Africa places on regional integration.

Energy Minister Peters also affirmed this stance. According to her, the impor-tance of integrating and mobilising the energy structures within the Southern African Development Community (SADC), adding that only South Africa, Angola and Zambia have efficiently working refineries.This whirlpool of allies, alliances and trade relations makes it difficult for South Africa to navigate the oil slicks and sea of changes of international diplomacy, and to choose whether it wants to suffer the socioeco-nomic impact of US sanctions or to abandon carefully cultivated alliances.

Navigating change & oil slicks, Essay

Port City PublicationsPort of Durban054

IINDUSTRY

Vopak Terminal Durban (Pty) Ltd105 Taiwan Road, IslandviewPhone: Fax:E-mail:Website:

+27 (0)31 466 9200+27 (0)31 466 9272nombuso.afolayan@vopak.comwww.vopak.com

With a history spanning nearly four centuries, Vopak is the world’s largest provider of

conditioned storage facilities for bulk liquids. Whether it’s liquid or gaseous chemicals,

oil products, petrochemicals, biofuels, vegetable oils or liquefied natural gas (LNG) we

offer complete storage and transshipment solutions at 80 terminals in 32 countries,

covering and connecting the world’s major shipping lanes.

Vopak distinguishes itself by offering service solutions that address a single, crucial

part of the supply chain and then takes it one step further. When you choose to work

with Vopak, the operational and safety standards apply to every country where we

operate. That means Vopak offers uniform quality where you take your shipments,

conditioning your products, keeping them safe, and keeping them secure – from ship to

shore and from shore to inland transportation.

Vopak’s experts, both in its offices and in the field listen to clients’ needs and provide

solutions to suit their specific liquids business. Vopak’s history and track record in bulk

liquids storage, health, safety and environmental care is unequalled in the sector. Its

core competency is the customer’s peace of mind.

Vopak Terminal Durban is an import/export/distribution terminal, whose current

specialty is the storage of chemical products. However, we are developing into the

Petroleum Market.

With our worldwide standards in best practices and our global values we give our local

and global Customers the highest service and top performance in safety.

“We have built our company over 400 yearson trust and reliability.”

Vopak Offers

Possibility to import or export bulk liquid productsStorage (temporarily) as part of a supply ChainLoading locations for vessels, trucks and rail carsConnections to pipeline infrastructure

C

M

Y

CM

MY

CY

CMY

K

The key players in a nutshell

The US: Though declining, the US re-mains the world’s top military power. Putting an emphasis on this position, the country is calling for sanction against Iran – accusing the country of using its nuclear programme for weapons. Iran says its programme will be used for generating energy.

The US is South Africa’s third trade partner and fourth biggest export market, at ZAR61 billion in 2011. It in addition, is a vital source of foreign funding for govern-ment and commercial projects, as well as aid for sectors such as health and education.

The EU: Lining up alongside the US, the EU agreed to stop importing Iranian crude from July 2012. Many individual member states cut back immediately, contributing to Iranian oil exports falling 13% in 2012’s first

quarter. As part of the EU embargo, Euro-pean insurers may not insure oil shipments from Iran - critical as they cover about 90% of the world’s oil tankers.

The EU is South Africa’s 2nd largest trade partner and top export market, amounting to ZAR152.5 billion in 2011.

Iran: Iranian crude oil exports amounted to USD70.7 billion in 2010. In 2009 oil and gas made up 80% of total exports and 60% of total government revenues. Iran’s main weapon against sanctions would be block-ading the Straits of Hormuz, which transits about a fifth of the world’s oil.

Some foreign investors that are deeply involved in Iran’s rich energy reserves include French Total, Dutch Shell, Italian Eni, Norwegian Statoil and South Africa’s Sasol. Some opportunistic clients, such as China, are trying to renegotiate for cheaper prices. India is apparently stockpiling ahead of the sanctions.

China: As Iran’s top oil buyer, an average of 500.000 barrels a day and about 22% of Iran’s production, China refuses to back the US sanctions. China’s stance against sanc-tions increases its geopolitical influence, despite confirming its strategically weak reliance on Iranian oil imports. It has been predicted the Chinese government would back its tanker insurance with sovereign guarantees.

China is South Africa’s third-largest export market, mainly for minerals, at ZAR90.2 billion.

Russia: South Africa’s exports to Rus-sia in 2011 amounted to only ZAR2.2 billion and in recent years, Africa has been margin-al to Russia’s foreign policy. Strategically, though, Samir Saran of New Delhi’s Observ-er Research Foundation has suggested Rus-sia could use BRICS to create an anti-West, anti-American grouping.

Essay, Navigating change & oil slicks

Edition 2012/13 055Port of Durban

INDUSTRY

I

One glance at the number of wrecks off the country’s long coastline indicates just how dangerous and unforgiving South Africa’s shore is. The South African Maritime Safety Authority (SAMSA), by monitoring practically every vessel movement, plays a key role in ensuring this number does not grow.

From his office Captain Saroor Ali, SAMSA’s regional manager for the East Coast of South Africa, is able to observe almost every the shipping movement that takes place in the Port of Durban. With over twenty years of seafaring experience as a Master Mariner, most of the shipping lines that frequent the port are well known to him.

How does SAMSA identify and monitor vessels? ‘SAMSA monitors and identifies vessels through the AIS (Automatic Identification System). All ships are required to maintain this system on board. It is however the ones that switch them off that cause the prob-lems. We are able to track ships through the

LRIT system (Long Range Identification and Tracking) but at any given time there may be over 1500 ships in the region. The danger of ill-equipped or poorly maintained vessels floundering along our coast always poses a huge threat to the country, both environ-mentally and financially.’

How does SAMSA protect both ships and coastal area?‘We have a continuous monitoring process and casualty response plan in place. There is a dedicated tug on stand-by as well as other vessels to provide assistance in emergen-cies. After assessing the situation, these may be deployed as required. Furthermore we are able to predict the direction in which the disabled vessel would drift and what immediate threat it poses to the environ-ment. Don’t forget we have two major roles to play in such situations: one is to protect the lives of those at sea and the other is to combat pollution, thus preventing environ-mental damage to our coastline. ’

When a ship needs to be salvaged, who pays for it? ‘Normally ships have insurance cover. We would then be in contact with the ship’s agent or owner and they would make arrangements to put up guarantees for the cost of the salvage. The shipping industry is perhaps one of the most regulated indus-tries, but there is always the danger of fly-by-night operators, or unscrupulous owners abandoning the vessel. In such case, the state has to become involved.Fortunately most pass our shores without incident but when things go wrong SAMSA has the task of minimizing the risks to both life and the environment.’

WRITERMike Lillyman

ILLUSTRATIONSacm + Floyd Paul

MARITIME WATCHMAN

PREFACESouth African Maritime Safety Authority (SAMSA) Regional Manager, Captain Saroor Ali and his team have the daunting job of monitoring of all vessels on South African shores; and making sure salvaging laws are followed.

Captain Saroor Ali, Q&A

Port City PublicationsPort of Durban056

IINDUSTRY

Ship and port facilities should have a veri-fied actual weight of the container before stowing it on board of a vessel, various inter-national shipping organisations say.

The International Association of Ports and Harbours, the World Shipping Coun-cil, the International Chamber of Shipping, and the Baltic and International Maritime Council have joined hands to encourage the International Maritime Organization (IMO) to amend the Safety of Life at Sea Conven-

GLOBALWeigh loaded containers

The National Ports Authority’s applica-tion for an 18.06% increase in tariffs for services and facilities for the 2012/2013-tariff year (1 April 2012 to 31 March 2013) has been rejected by the Ports Regulator of South Africa.

The regulator considered both com-ments from relevant stakeholders as well as the existing regulatory framework in mak-ing its decision and concluded that a 2.76% tariff increase was a reasonable and appro-priate increase. – (BW)

Source: The Ports Regulator of South Africa / www.portsregulator.org

SOUTH AFRICANPA tariff increase rejected

tion (SOLAS) to include this stipulation. Weighing loaded containers is already

common practice in the United States of America. All of the stakeholders agreed that having the actual weights of containers improves safety aboard ships, safety in the ports, and safety on the roads, and warned that relying on the recorded weight from the shipper could be dangerous. – (BW)

The Port of Durban is set to benefit from Transnet’s ZAR300-billion capital expendi-ture plan. The seven-year strategy intends to transform the company into the world’s fifth-largest rail freight company - shifting the lion’s share of haulage from road onto rail.

The infrastructure investment will al-most double Transnet’s rail freight capacity (from 200 to 350 million tons), especially in commodities such as iron-ore, coal and manganese, significantly reduce the cost of doing business in South Africa, diminish congestion and reduce carbon emissions. Studies have shown that rail is 75% more efficient than road transport.

The multi-pronged strategy also aims to increase container traffic through ports (from the current 79% market share to 92%), expand commodity exports, increase petroleum inland supply, improve productiv-ity and efficiency in rail and port operations,

promote local suppliers, accelerate skills development (with ZAR7.7 billion spent on up-skilling), target youth employment, and triple Transnet’s overall profitability.

The strategy will be funded by operat-ing cash flows and borrowings from capital markets.

Once complete, Transnet will have posi-tioned itself as one of the global role-play-ers in integrated rail freight and commodi-ties transport, and will play a significant role in South Africa’s economic growth. – (NM)

SOUTH AFRICAZAR300 billion and some change

Briefings