Issued by: Office of the Deputy Presidency
4 August 2000
Master of Ceremonies
The Chief Executive Officer of Sasol
Distinguished Guests
Ladies and Gentleman
It gives me great pleasure to join you today in celebrating the launch of the Durban-South gas pipeline
I first became acquainted with this project in 1997, after being approached by SASOL gas for assistance and support in fast tracking the delivery of the pipeline. This represented a very important investment for KwaZulu-Natal but there was a more urgent priority which delivery of this project would impact on. Gas is an industry with great promise and potential in our country and the southern African region.
The availability of gas therefore complements South Africa's rich mineral deposits and, its introduction into South Africa's mainstream energy supply will promote the security of energy supply through diversity.
Our country has a growing national gas infrastructure stretching from Sasolburg in the Northern Free State, through the Vereeniging, Johannesburg and East Rand industrial areas, from Secunda on to Witbank and Middleburg, Newcastle, Richards Bay and now down to Durban South. The pipeline to Durban-South covers distribution lines in the industrial areas of Merebank, Prospecton, Isipingo and Umbogintwini.
This relatively small but robust, rapidly growing and profitable coal gas industry bodes well for the future of natural gas in South Africa, especially as the traditional bulk markets such as electricity generation and large chemical plants have not yet been tapped.
There is a pressing need, for environmental management of the Durban South Area. Communities have for years now been campaigning for a cleaner environment. SASOL's gas pipeline therefore represents an important step in introducing an environmentally friendly source of energy, which would impact positively on reducing industrial emissions, particularly from the large industries located in this area. Government would like to encourage smaller industries to consider this source of energy as an environmentally sustainable alternative.
The Durban South area is quickly reaching its maximum levels of toxicity through industrial emissions. This is impacting negatively on surrounding communities. It is an urgent problem that we all need to address collectively. The issue of the environment is an issue that affects us all.
Our challenge to business, the communities and labour is to work in partnership in order to make rapid progress in reducing these toxic emissions for the benefit of all who work and live in this area. The challenge the industry faces in the future is to develop a culture of gas usage by potential energy intensive industries.
The SASOL Gas pipeline is an important development that could make a major contribution to create a cleaner and healthier environment and improve the quality of life for future generations.
Local government, in particular, could play a greater role in supporting this development through providing an incentive framework for industry to switch to this form of energy.
National government is serious about promoting this form of energy usage. The introduction of natural gas into South Africa's mainstream energy supply is an important step in realizing our policy framework set out in the Energy Policy White Paper.
One component of South Africa's energy policy is to address energy security by encouraging diversity of both supply sources and primary energy carriers and gas has been identified to play an important part in this process. Through this we hope to achieve International competitiveness of our industry and simultaneously offer opportunities for small-scale industrial development along transmission lines.
One of the key focus areas for government is the Southern African region. We favour non-discriminatory open access to uncommitted capacity in gas transmission pipelines. Third parties must be able to negotiate upgrading of pipelines at their own expense to ensure that capacity is available for them.
The governments of Mozambique and Namibia share our approach. It is in our common interests that this approach underpins our bi-lateral negotiations for gas trade agreements.
We also recognise the necessity to nurture the pipeline development industry to realise its investment and lower its risk exposure. we are therefore looking at ways to address this issue. One option in this regard that needs to be considered is to phase in the regulatory regime over a number of years.
National Cabinet recently approved the establishment of a national gas development company within the Central Energy Fund Group. The task of this company will be to enter into joint ventures for gas transmission pipeline projects.
In addition, the Department of Minerals and Energy has formulated a Gas Bill as part of the legislative framework to govern the industry. The bill sets out the procedures for granting of licenses for construction, operation and trading for transmission, distribution and storage. It has been, for some time now, available for public comment and the deadline for this is, incidentally, today.
The global competitiveness of our economy will be further strengthened by realizing our potential for the development of natural gas resources in the Southern African region. We need to rapidly diversity our energy base, in line with other parts of the globe. South Africa is committed to play its part through promoting an integrated approach to addressing the development of the industry, and effectively co-ordinating with our neighbours to realize our potential.
In order to facilitate the movement of gas across international borders, a cross border gas trade agreement with Mozambique is currently in the approval process, and a similar agreement with Namibia is also currently under negotiation.
At the same time we realize that pipelines have a long lead-time. The good news is that these transmission pipelines are particularly susceptible to economies of scale. I am therefore optimistic and expect that we could see the first delivery of natural gas across our borders with the next five years.
The gas industry, whether synthetic or natural gas, can play a role in support of our drive for sustainable job creation, regional development and improving quality of lives of our people. With the support and co-operation of the private sector, we will make these priorities a reality.
To conclude let me state our appreciation of the initiatives of SASOL to implement a black empowerment policy in the pipeline sector. We hope that this initiative will extend to other areas of the company so that we could see more emerging business people participating. We believe that the participation of this sector of our society is crucial to expand the base of our economy. We note and appreciate also the initiatives of the company in the area of corporate social investment, a key component in any developing country.
To SASOL Gas, congratulations for a job well done and we look forward to working with you in the years ahead to build a strong, thriving and globally competitive industry.
I thank you