9 TH AFRICA OIL & GAS, TRADE & FINANCE CONFERENCE AN UPDATE ON THE KUDU GAS FIELD MAPUTO 3 JUNE 2005 KEVIN STALLBOM BUSINESS UNIT MANAGER: KUDU NOT AN OFFICIAL UNCTAD RECORD

Kudu history – key milestones Discovered 1974 by Chevron/Regent/Soekor Two wells drilled by Swakor Licence awarded 1993 – Shell (75%), Energy Africa (25%) Energy Africa farm-out 15% to Texaco Petroleum field declared 1997 Drilled four wells Shell relinquished ChevronTexaco (60% + operatorship), Energy Africa (40%) ChevronTexaco relinquished Nov 2003 – Energy Africa 100% Dec Energy Africa 90%, Namcor 10% Tullow Oil acquires Energy Africa May 2004

Kudu Licence Area: Block 2814A 170 km to Oranjemund 800 km to Windhoek 800km to Cape Town Logistically remote area Development overlaps Namdeb diamond mining area

Kudu Upstream JV Energy Africa Kudu Limited (90%) Namcor (10%) + Partners Kudu Power Station Company Nampower (100%) + Partners (?) Gas Sales Agreement Nampower Power Purchase Agreement Domestic sales in Namibia Power Purchase Agreement Eskom - export sales to RSA Kudu Project Scheme

What have we done differently…… Initiated a “fresh” look at the broader development options Recognized current window of opportunity in power market Focused development on proven GIIP only : de-linked Phase 1 gas-to-power project from upside development opportunities Established “open book” co-operative approach with downstream parties

Kudu Steering Group Co-ordination, consultation, guidance, consensus (as per MOU/LOI) Upstream Petroleum Agreement License 005, Area 2814A JOA Energy Africa Namcor + Partners Relationship defined Downstream Kudu Power Station Company Nampower Eskom + Partners (?) Relationship still to be defined Joint Development Agreement Final Investment Decision First power Distinct but integrated elements of same project milestones Co-operative “management” structure

The Southern Africa Power Pool (SAPP) experiencing diminishing generation surplus capacity in the region caused by: increasing power demand at a rate of three percent per year (1200MW) in the last six years If no new generation project then in 2007, the SAPP will run out of generation surplus capacity. There has been no significant investment in generation in the last 10-years, despite the rise in power demand. Power demand growth in SADC Courtesy

Power stations in Namibia Ruacana Hydro, Run-of-the-river Van Eck Coal fired, Standby Paratus Diesel & HFO Standby Katima Diesel, not connected to rest of Grid ANGOLA ZAMBIA BOTSWANA REPUBLIC OF SOUTH AFRICA Atlantic Ocean Walvisbay Ruacana 240 MW Van Eck 128 MW Rundu Windhoek Lüderitz Paratus 24 MW Katima 3 MW Oranjemund Kudu 800 MW Courtesy

Namibian transmission backbone Otjikoto Omburu Kokerboom Ruacana Aries Otjikoto Obib Gerus Rössing Walmund Hardap van Eck ANGOLA ZAMBIA BOTSWANA REPUBLIC OF SOUTH AFRICA Atlantic Ocean Aggeneis To Hydra To Koeberg Otjikoto Kokerboom Auas Red – 400KV Blue – 330 KV Yellow KV Courtesy

Kudu Power Station: impact on region Timing, availability of new generation in 2009 Strengthening of regional grid Reduction in transmission losses Diversification of energy mix portfolio, especially to encourage the introduction of natural gas and to increase the role of renewable energy sources Socio-economic injection Development of Namibia’s gas resources

Progress made on Kudu project – (1) Joint Development Agreement July Energy Africa, Namcor, Nampower & MOU with Eskom Commercial Agreements Draft Heads of Agreement tabled and negotiation process begun Power station site & pipeline route Pipeline route dependent on power station site Conclusion on discussions with Namdeb expected soon

Kudu Power Station Configuration 2 x 400 MW (nominal) Single Shaft Combine Cycle Gas and Steam Turbines Mechanical draft evaporative cooling towers with sea water make-up Courtesy

Kudu Power Station Location Uubvley 25 km

Pipeline route options

Progress made on Kudu project - (2) FEED study – confirmation of project feasibility Development concept selected - protects schedule and budget FEED study contract awarded to John Wood Group, results due July 2005 EIA approved Reprocessing 1993/96 3-D seismic survey Contract awarded to CGG Completion October 2005

WATER DEPTH : 170m RESERVOIR DEPTH 4400mbmsl HIGH PRESSURE – 536 bar HIGH TEMPERATURE – 158°C DRY/SWEET GAS – 96% CH bbls/MMscf CONDENSATE DETERMINISTIC GIIP (Tscf) EAGCA PROVED PROBABLE POSSIBLE Kudu field area

Kudu development plan Robust and simple Proven technology Realistic schedule Potential to realise the upside Commercially viable

Matched production profile Total well capacity Production profile

Pre-feasibility development concept

FEED development concept selection

Subsea – Umbilical Option

Subsea – Control Buoy

Katabatic winds & aerosol sand plumes Further technical challenge for onshore facilities Avoided offshore by subsea development

Kudu Gas-to-Power project plan 1 st half 2006: Final Investment Decision & Financial Close 2006 : Upstream Construction 2007 : Downstream Construction 5 July 2004: Signing of JDA & MOU, Full Feasibility Phase Starts 1 st Quarter 2009: Gas on-shore 2 nd Quarter 2009: 1 st 400MW 3 rd Quarter 2009: 2 nd 400 MW

Beyond Phase1 Kudu Gas-to-Power…….. Phase 1: 800MW gas-to-power project 2004 – 2005 – seismic reprocessing – FEED study – GSA & PPA – Financing – Partners 2006 – 2008 – Construction 2009 – production Post - Phase 1:options Additional gas-to- power Liquefied Natural Gas, Gas-To-Liquids, or Compressed Natural Gas Gas export to South Africa

Current post-Phase 1 activities Complete planning for drilling two wells in 2006 to confirm the upside potential in greater Kudu field area. Drilling timing dependent on: – Rig and materials availability – Partners (?) High level techno-economic evaluation of the earlier work on the three post-Phase1 options and prepare work program for further investigation Preparing to bring in new partners - probably during second half 2005

In summary:- Phase MW gas-to-power project progressing well with final investment decision expected early 2006 Post - Phase1 activities for evaluation of +/- 8 Tscf GIIP upside: – Preparation to drill two wells in 2006 – Evaluating development options for three scenarios  Additional gas-to-power  LNG / GTL / CNG  Gas export to South Africa Preparing to bring in additional partners during second half 2005