STAYING THE COURSE IN AFRICA John Sichinga, Senior Vice President Sasol Exploration and Production International Africa Oil Week, Cape Town 3 November 2016
Forward-looking statements Sasol may, in this document, make certain statements that are not historical facts and relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. Examples of such forward-looking statements include, but are not limited to, statements regarding exchange rate fluctuations, volume growth, increases in market share, total shareholder return, executing our growth projects and cost reductions, including in connection with our Business Performance Enhancement Programme and Response Plan. Words such as "believe", "anticipate", "expect", "intend", "seek", "will", "plan", "could", "may", "endeavour", "target", "forecast" and "project" and similar expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forwardlooking statements. These factors are discussed more fully in our most recent annual report on Form 20-F filed on 27 September 2016 and in other filings with the United States Securities and Exchange Commission. The list of factors discussed therein is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider both these factors and other uncertainties and events. Forward-looking statements apply only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. Please note: A billion is defined as one thousand million. All references to years refer to the financial year ended 30 June. Any reference to a calendar year is prefaced by the word "calendar". Comprehensive additional information is available on our website: www.sasol.com 2
WHAT YOU WILL HEAR TODAY Our commitment to Africa Our Mozambique story Our positioning in South Africa West Africa our new focus area Summing up Q&A CTRG gas to power plant, Ressano Garcia, Mozambique 3
SASOL AT A GLANCE An international integrated chemical and energy company Produces a range of high value product streams, including liquid fuels, chemicals and low-carbon electricity Major facilities in South Africa, USA and Europe Tripling our commodity and specialty chemicals capacity in USA World leader in gas-to-liquids (GTL) technology, with > 60 year s experience Growth opportunities in Southern Africa & USA Ability to fund growth Balanced portfolio Revenue breakdown - FY16 41% 1% 1% 19% 37% Mining Exploration & Production Int'l (EPI) Energy Base Chemicals Performance Chemicals Presence in 33 countries Approximately 30 100 employees world-wide Reclassified to speciality chemicals sector on the JSE Turnover of R173bn (US$12bn) for FY16 [R185bn (US$16bn) for FY15] 4
AFRICA HAS BEEN BUFFETED BY GLOBAL ECONOMIC HEADWINDS Plunge in commodity prices Poor infrastructure/ supply chain Evidence of regression in good governance The World Bank predicts growth will slow to ~3% this year, down from 7-8% a decade ago Low levels of local skills In the short term, challenges are significant but in the long term, the potential rewards from a market of US$1,2bn are too juicy to ignore despite the risks 1 1 - Source: The Economist 5
BUT WE STILL SEE STRONG ARGUMENTS FOR STAYING THE COURSE Positive demographics Resource endowment Improving governance Growing markets Increasingly becoming an energy consumer from a net energy exporter For Sasol, Africa continues to be important because: We have an African heritage We are in it for the long term Key advantages have not gone away i.e. large growing markets, young large talent pool, resource endowment etc. Source: Global Briefing and The Economist 6
AFRICA REMAINS THE YOUNGEST CONTINENT IN THE WORLD Despite recent slowing in growth rate fundamentals are in place to support high future growth rate 2050 - projections Collective GDP USD 5.5 trillion in 2050 Population 2.4 billion in 2050 Population urban areas 60% in 2050 Consumer spending USD 4.7 tr in 2050 Source: The Economist Intelligence Recent commodity bust has hurt Africa but offers opportunity to diversify economies and cheaper energy presents increased in-country monetisation options 7
WHAT SASOL OFFERS Compelling value offering and proven track record aligned with most host government growth drivers Southern Africa in particular is part of Sasol s dual regional growth strategy Key to this strategy is to deliver steady growth with an oil bias focused on Africa Sasol has access to competitive proprietary and licensor gas monetisation technologies Relevant capabilities Willingness and capabilities to develop integrated gas Growing market presence Large project development capabilities African brand Ability and willingness to upskill NOC capabilities Build on Sasol s existing positions Africa new discovered reserves (Bboe) 30 +41% 25 20 15 10 5 0 AFRICA FOCUS 19 26 2003-2008 2009-2015 (YTD) Gas Oil Source: Rystad 8
WE HAVE A GROWING OPERATIONS, SALES AND MARKETING PRESENCE IN AFRICA 9
OUR UPSTREAM AREAS OF INTEREST ARE PRIMARILY FOCUSED IN AFRICA Etame Marin ATLANTIC OCEAN GABON ATLANTIC OCEAN N TCP 3A/4A ATLANTIC OCEAN N CONGO SOUTH AFRICA PPA Area A INDIAN OCEAN SOUTH AFRICA Mozambique MOZAMBIQUE PT5-C PSA(N) Blocks PPA(N) 16 & 19 Inhassoro CPF Block 16/19 PPA(S) Area Area A A Block PSA(S) 16/19 Vilanculos PSA MOZAMBIQUE SWAZILAND ER236 INDIAN OCEAN N Indian Ocean A5-A Sasol Exploration and Production International develops and manages the group's upstream interests in oil and gas exploration and production Mozambique is at the centre of our growth strategy for Southern Africa In South Africa, ongoing exploration interests: Offshore KwaZulu-Natal and West Coast In Gabon, we have an equity stake in an oil producing asset Outside Africa, we have a 50% equity interest in a shale gas venture in British Columbia, Canada with Progress Energy 10
MOZAMBIQUE IS AT THE CENTRE OF OUR GROWTH STRATEGY FOR SOUTHERN AFRICA 11
THE NATURAL GAS PROJECT IN CROSS BORDER VALUE CHAIN WAS ENABLED BY ESTABLISHED MARKETS IN SOUTH AFRICA Initial US$1,2bn project involved: Temane and Pande gas field development: Beneficial Operations (BO) - 2004 and 2009 respectively Conversion of Sasolburg from coal to gas feedstock Construction of 26-inch, 865 km pipeline from Temane to Secunda Expansion and exploration to the initial facility and growth projects undertaken to date total approximately US$2bn and include: Pipeline compressor: US$140m, BO - 2010 Central Processing Facility (CPF) expansion: US$227m, BO - 2012 Loopline 1: US$200m, BO - 2015 Loop Line 2 (LL2): US$210m being commissioned Royalty gas helped to stimulate the growth of gas-to-power hub in Ressano Garcia CTRG, in partnership with EDM, is the first permanent gas-to-power plant in Mozambique - US$246m, BO - 2015 12
OUR STRATEGY IN MOZAMBIQUE IS UNDERPINNED BY SOUND SOCIAL INVESTMENT PROGRAMMES Sasol s operations have become a catalyst for social development Prioritising people-centred, needs-driven capacity building and the sustainable development of communities Over 150 projects are reaching over 500 000 beneficiaries in three provinces along the Natural Gas Project We have spent over US$21 million to date on social investment initiatives within the county 13
CTRG: MOZAMBICAN COMPANY, BENEFICIATING MOZAMBICAN GAS AND OPERATED BY MOZAMBICANS First permanent electricity investment since Mozambican independence 175 MW, state-of-the-art gas engine power plant Commissioned 27 February 2015, start-up and one year performance tests passed Currently benefiting over 2 million Mozambicans Accelerated execution enabled by Sasol financing bridging loan, with financial close to follow Routine maintenance being performed within the CTRG plant Aerial view of the CTRG power plant in Ressano Garcia 14
THE TEMANE & PANDE GAS FIELDS UNLOCKED SOCIO- ECONOMIC DEVELOPMENT IN THE COUNTRY Contributed to creation of favourable and safe investment climate and established oil and gas sector in country Gas development with our partners has been a catalyst for socioeconomic growth through: Tax revenue (one of the largest tax payers in the country) significantly higher when investment was paid off Capital investments and spin-offs from secondary industries Leadership development and capacity building over 80% of the staff at our gas processing plant are Mozambican Enabled the development of communities Progressively building Mozambican talent pool for own and industry needs Students from Mabote Technical School and household running on gas reticulation system Gas reticulation systems have benefited over 300 families in Vilanculos Sasol has helped to improve access to education by building schools 15
INVESTING IN MOZAMBICAN TALENT PARTNERSHIP WITH EDUARDO MONDLANE UNIVERSITY (UEM) Minister for Higher Education, Science, Technology & Vocational Training and key dignitaries VIPs with the first group of students Leveraging Sasol s university collaboration approach to build the necessary value adding capabilities within Mozambican universities: Sasol and UEM have partnered to develop the Downstream Master s programme due to the importance of downstream industry to Mozambique An increased pool of downstream skills will help to drive the development of downstream industries which are pivotal to in-country monetisation of Mozambique s hydrocarbon resources The first class of Master s students comprises 23 learners including recent graduates and industry professionals 16
THE PRODUCTION SHARING AGREEMENT (PSA) LICENCE IS SET TO BRING ABOUT THE NEXT WAVE OF DEVELOPMENT Adjacent to the current producing Petroleum Production Agreement (PPA) area An integrated oil, LPG, i.e. a Liquid Processing Facility (LPF) and gas project Additional gas processing train (5th Train) will be required within the existing Central Processing Facility (CPF) in order to process the additional gas from the PSA The Mozambique Gas to Power Project The initial FDP includes development of four reservoirs for which Notices of Commercial (MGtP) Discovery was approved (NCD) were submitted as the in downstream February and May 2013 gas monetisation project from the initial phase of the PSA PSA Phase 2 development based on Commercial Assessment Phase (CAP) reservoirs may provide additional resources in future The initial FDP includes development of four reservoirs for which Notices of Commercial Discovery (NCD) were submitted in February and May 2013 17
CENTRAL PROCESSING FACILITY (CPF) & LIQUID PROCESSING FACILITY (LPF) PLANTS LOCATION LPF CPF 18
INITIAL PHASE OF THE PSA DRILLING PROGRAMME Temane G8 Gas Temane G10 Gas PSA-T-26 PSA-T-27 9.0% PSA Temane/Inhassoro Inhassoro G10 Oil Temane East Gas (G11/G11A/G12/G12A) Inhassoro G6 Gas PSA-I-15 PSA-I-16 Inhassoro G6 Oil The drilling campaign commenced in May 2016. Thirteen development wells will be drilled including a water well First gas well extended confidence to south of field Produced gas on test Further analysis on-going to better confirm gas volumes in southern part of field Drilling of the second gas well in the northern part of the Temane Field was completed on 2 October 2016. Data acquisition from the pilot hole was successful, with 35m of core recovered. The pilot hole also encountered hydrocarbon bearing reservoirs in additional layers Drilling of the first Inhassoro G6 oil rim well commenced on 11 October 2016 PSA Location Map showing gas fields (red) and oil fields (green) 19
THE DEVELOPMENT OF THE PSA SURFACE FACILITIES IS GAINING TRACTION Good progress on surface facilities detailed design which includes: 15 000 bbpd liquid processing for light oil 20 000 tons LPG capacity facility 5th train at CPF to process gas from the PSA Gas produced in Phase 1 of the PSA Development to be allocated to the Mozambique Gas to Power project (MGtP) for the generation of 400 MW of electricity in Southern Mozambique We are working through both the options of export of oil and in-country processing and usage Integrated liquid processing and LPG facility Site layout for MGtP LPG storage and loading 20
FIRST 3D SEISMIC ONSHORE CAMPAIGN IN MOZAMBIQUE A combined 3D and 2D seismic programme is being recorded over: PSA oil reservoirs to de-risk future well locations PSA Phase 2 (CAP) area to locate wells PT-5C to assess future exploration wells PT5-C 2D (~1,600 Km) INHASSORO CENTRAL 3D (~115 Km 2 ) INHASSORO SOUTH 3D (~110 Km 2 ) & Seismic vibrator and geophone strings 21
ALIGNED TO THE PSA, THE INHASSORO TRAINING CENTRE WILL TRAIN AND DEVELOP MOZAMBICAN NATIONALS Partnership with the National Institute for Employment and Vocational Training (INEFP) under the Mozambique Ministry of Labour Currently operating a temporary training facility which is training over 100 learners Estimated to cost about US$13,4 million. Permanent training centre will be operational in early 2018 Ultimately the Inhassoro Training Centre will train over 460 artisans, the majority of whom would be utilised on the PSA project Learners within the temporary facility, training covers areas like welding, steel working, pipefitting, painting and insulation, as well as mechanical, electrical and instrumentation training Artist s impression of the permanent facility to be operational in 2018 22
ADVANCING LOCAL CONTENT TO ENABLE PARTICIPATION OF LOCALLY OWNED BUSINESSES WITHIN SASOL S VALUE CHAIN Our preferential procurement approach aims to improve the participation of Mozambican based and owned businesses within our supply chain We currently have 17 local suppliers within our Enterprise Supply Development (ESD) programme, we have concluded gap analysis and are rolling out technical support in areas including Safety, Health, Environment and Quality Management Systems; and others Suppliers FY15 18 67 73 160 Int Int Mozambique Mozambique owned <50% Mozambique owned >50% Launch of Sasol enterprise and supplier development programme in Vilanculos Engagement with suppliers in Maputo 23
SASOL S SUBSTANTIAL IN-COUNTRY INVESTMENT HAS BEEN BASED ON STRATEGIC PARTNERSHIPS 24
WE ARE ALSO POSITIONED TO CAPTURE FUTURE VALUE BY PROGRESSING GAS EXPLORATION IN SOUTH AFRICA Durban basin offshore ER236 November 2013: Granted exploration right for 82 000km² April 2014: completion of 5 950km of 2D reconnaissance seismic data December 2014: 40% farm-in by Eni S.p.A. who then became operator, with Sasol retaining a majority 60% interest July 2016: completion of 4 300km² of 3D seismic acquisition Orange basin offshore Block 3A/4A May 2013: Technical Cooperation Permit (TCP) for 21 000 km² awarded to Sasol and PetroSA (50:50 equity partners, PetroSA is operator) Following a one year desk top study, the partners applied to convert the 3A/4A Block from a TCP to an Exploration Right (ER) July 2015: ER awarded but unsigned. The initial three-year exploration work programme comprises a firm airborne gravity and magnetic survey, and contingent on these results, a 2D seismic survey Sasol exploration interest in South Africa 25
AFRICA HOLDS SIGNIFICANT HYDROCARBON RESOURCE POTENTIAL Million BoE of oil and gas in the top 20 discoveries of the year 2016 2015 2014 2013 2012 Africa Americas Asia Africa Americas Asia Australia Europe Middle East Unspecified Africa Americas Asia Australia Europe Middle East Oceania Africa Americas Asia Australia Middle East Africa Americas Asia Europe Middle East Source: PwC 3 962 1 842 3 230 1 924 714 220 569 922 317 2 231 989 963 205 309 190 155 1 824 399 296 133 1 863 221 318 302 720 6 684 10 713 From a proven oil reserve totalling 129.1 billion barrels, Africa produced 8.4 million barrels of crude oil per day (bbl/d) in 2015 As at the end of 2015, Africa has a proven natural gas reserve base of 496.7 trillion cubic feet (Tcf) An estimated 100 billion barrels of oil offshore Africa are yet to be discovered 11 of the top 20 discoveries in 2015 were made in Africa Sasol is seeking: Proven hydrocarbon basins Proximity to developed infrastructure, markets and skilled workforce Producing oil assets Exploration opportunities Sources: PWC, USA EIA, BP Statistical Energy Review and Bloomberg tv Africa 26
WEST AFRICA IS A REGION OF SIGNIFICANT HYDROCARBON RESOURCE POTENTIAL It fits our medium term growth strategy of delivering steady oil-biased growth with an African focus We have identified high prospective basins applying our geology led strategy that aligns with our strategy for West Africa 27
OUR EXISTING ASSETS WITHIN THE ETAME MARINE PERMIT IN GABON REMAINS A VALUABLE ASSET EBOURI EEP PLATFORM ETAME NORTH TCHIBALA SEENT PLATFORM SOUTH TCHIBALA/ AVOUMA SE ETAME ETBNM-1H ETBNM-2H Partnership: VAALCO: 28,07% (operator) Addax: 31,36% Sasol: 27,75% Tullow: 7,50% (carried) Sojitz: 2,98% PetroEnergy: 2,34% Key attributes: ~80 meters water depth 2 new platforms put into production in 2015 >93 mmbo produced Remaining resource base of 50-70 mmbo Lifting cost below $28 Sasol entry into Etame permit First oil from Etame Discovery of Avouma and Ebouri Fields First oil from Avouma First oil from Ebouri First oil from EEP First oil from SEENT 1998 99 00 01 2002 2003-2004 05 06 2007 08 2009 10 11 12 13 2014 2015 16 28
IN CONCLUSION, WE ARE STAYING THE COURSE IN AFRICA Mozambique is firmly at the centre of our growth strategy for Southern Africa We are positioned to capture future value in South Africa West Africa offers a wide range of oil and gas opportunities that could enable Sasol to deliver steady growth Africa is open for business and we are open to expanding our footprint on the continent 29
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