PETROLEUM PIPELINES BILL June 2003

Sasol supports the Bill ä Sasol supports the process of regulation insofar as it contributes to the stability of the industry ä Sasol supports the SAPIA submission ä SAPIA submission represents the concern on common issues HOWEVER ä There are a number of issues that are company specific

Petronet Crude Oil SBM Single Buoy Mooring (Isipingo) Consumer Natcos Airport Refinery Tankfarm Coastal Refineries Natcos Fynnlands Refinery Tankfarm Inland Refineries Storage Depots Road tanker Retail stations SCI Sasolburg Secunda Synfuels Tankfarm Pipeline DJW (Refined Products) Road tanker Spoornet Storage Private Commercial customers Petronet Retail station tank

Separate licences essential Some industry players may advocate that a pipeline may be licensed for both crude and petroleum products contrary to S 20(d) Sasol supports DME drafters in that: ä There must be separate licenses as a crude pipeline is an integral part of the refinery. ä The ability to switch over to other petroleum products involves extensive planning. ä A refinery cannot afford disruptions in manufacturing activities. ä Should be for emergencies only, as stated in Bill

Depots will facilitate access for new entrants to oil industry Clarity required as to whether the definition of storage facility includes distribution depots. Some industry players will advocate the position that distribution depots should be excluded from the ambit of the Bill. ä PPB objectives ì promoting competition ì fair and equitable access to facilities ä Depots are such an integral part of the logistics chain that exclusion from the definition would not give effect to objectives of the Bill. ä Depots are essential facilities for new entrants and BEE companies. ä Its inclusion is essential and it is requested that this be clarified.

Cancellation of existing contracts Section 20(f) gives notice by law that certain contracts are terminated with five years’ notice. Some industry players believe that there should be no notice period. ä Section 20(f) contracts were concluded in good faith ä Termination by law prejudices the rights of parties to enter into contracts ä Bona fide contracts concluded with service providers formed the basis for certain investment decisions and hence require a reasonable planning horizon to put alternatives in place ä Even though the current notice period is regarded as too short, five years is an absolute minimum ä Termination by law raises constitutionality concerns

Natref neutrality compromised ä Application of S20(f) ì The above provision has the effect of invalidating an agreed principle which was used as basis for investment as recently as 2002 ì There is no guidance in the bill as to whether principle recognised or not Natref in Durban

ä Application of principle might have differed throughout but the effect thereof remained – Natref always was and still is neutral ä The application of the principle resulted in investment decisions of up to R1.5 billion – last as late as 2002 ì Optimisation of crude slate, transport logistics and increased refinery yields of white products ì Investment made at a certain rate of return ì Crude pipeline an integral part of an oil refinery Principle = Rules = optimisation = sound investment

Natref in Durban ä Application of the principle must continue and it needs to be enshrined within the new Bill ä Not continuing this principle sends the wrong message to business community ä Provision is included acknowledging and respecting the principle

THANK YOU