STABILISING LPG SUPPLY IN SOUTHERN AFRICA CONFERENCE

14 March 2012

Southern Sun O.R. Tambo International Gauteng

By

Patrick Mabuza1

Regulation of LPG

Outline• Who Regulates What?• Introduction to NERSA• How does NERSA Regulate LPG• Examples – Licensed LPG Facilities• Licensing Process• Licence Conditions

– Tariffs– Reporting

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Upstream

Transmission

Petroleum Agency

Dept of Energy

NERSA

Retailing

Dept of Energy

Refining

Wholesaling

Storage

WHO REGULATES WHAT?

INTRODUCTION TO NERSA

• November 2005 – Commencement

• Economic regulator– Electricity (took over from NER)– Piped Gas– Petroleum Pipelines (includes storage and

marine loading facilities)

• Public hearings/ written submission

• Written decisions and reasons for decision

• 3 different Acts

• Electricity and petroleum pipelines treated as established industries

• Gas treated as an infant industry – less onerous regulation

HOW DOES NERSA REGULATE LPG

Petroleum Pipelines Act (PPA)

• “petroleum” - crude oil and petroleum

products;• “petroleum products” - any liquid

petroleum fuel and any lubricant, whether used or unused, and includes any other substance which will be used for a purpose for which petroleum fuel or any lubricant may be used

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Licensing LPG Activities

• Construction, operation and conversion of facilities

–Pipelines for the transportation of LPG;

–Storage facilities for LPG

–Loading facilities for LPG Located in harbour.

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LPG Facilities excluded (1)

• Pipelines located on premises of

– a manufacturer of petroleum products;

– a storage facility;

– a retailer of petroleum products;

– an agricultural cooperative

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LPG Facilities excluded (2)

• Storage facilities– Integral part of manufacturing process;– for own final use;– used for the retailing of products to the public;– used by an agricultural cooperative

exclusively for its members; and– used to transport petroleum by road, rail, sea

and air

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EXAMPLES – LICENSED LPG FACILITIES

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LPG Facilities Licensed (1)

• Sunrise Energy Terminal (Saldanha Bay)- construction phase– Construction of loading facility and storage – Loading & Storage connected by pipeline

(3km undersea & 1.8 km overland)– To be used for importation of LPG (5 000 – 7

000 metric tons per month)– Transported out of facility by road & rail

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LPG Facilities Licensed (2)

• Easigas – Sidwell, PE Facility–Operational storage facility

– 315 m3 capacity

– 4 horizontal cylindrical tanks

–LPG into via road &rail from SAPREF & PetroSA

–Out via road, reticulation network & cylinders

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LPG Facilities Licensed (3)

• Island View Storage Richards Bay –operational facility–Operation - storage facility

– 6 000m3 capacity

–In, via marine loading facility

–Out, via road and rail 15

LPG Facilities Licensed (4)

• Montague Gardens (mixed facility)

–Operation - storage facility

– 90m3 capacity (2 tanks)

–In via rail loading facility

–Out via road

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LICENSING PROCESS

The PPA

• Sections 15 - 19– Pre licensing discussion with NERSA allowed– Contents of the application

• Incl. administrative, technical & financial abilities• Confidential requests

– Application Notice published by applicant• 30 days viewing period

– Amendment of application at direction of NERSA– Finalisation of application – 60 days– Separate or combined licenses

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The PPA Rules

• Rules 1 – 12 – Hand delivery/ registered post and

electronically– 2 copies – Indexed & paginated

• Annexure A - confidentiality request

• Annexure B - Application for licence

• Annexure C - notice of incomplete application

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LICENCE CONDITIONS

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The PPA RulesSection 20(1)

– RRM– Common carrier for pipeline – proportionate usage– 3rd party access to loading – proportionate usage– 3rd party access to storage

• uncommitted capacity • allocation mechanism

– Approve/ set tariffs– Reporting

• Section 20(2) – amendment of conditions

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Thank you

22www.nersa.org.za