1. Kudu Gas to Power Project – Contributing to regional supply
ICC Windhoek, October 2007
Kudu Gas to Power Project – Contributing to regional supply
presented by Margaret van der Merwe
Generation Projects: Power System Development, NamPower
ICC, Slide 1, 31 October 2007

2. Content (Courtesy of Tullow) Background and key components
Challenges and Solutions
Benefits
Conclusion
(Courtesy of Tullow)
ICC, Slide 2, 31 October 2007

3. Kudu gas field history – key milestones
Discovered by Chevron/Regent/Soekor
Licence awarded, drilled four wells
Shell (75%), Energy Africa (25%), Energy Africa farm-out 15% to Texaco
Various licence holder changes
Shell relinquished to ChevronTexaco (60%), Energy Africa (40%)
2003 – ChevronTexaco relinquished to Energy Africa (100%)
Energy Africa (90%), Namcor (10%)
Tullow Oil acquires Energy Africa
Tullow indicated Itochu farm-in (20%)
2007
Tullow indicated plan to do more exploration/appraisal drilling wells to test multi-tscf play
Kudu-8 drilled, gas bearing sands thicker and better quality than Kudu-5, but lower permeability, unaided production flow rate would not exceed Kudu-5
Results to be incorporated in geological model for the area in advance of any decisions on further drilling
(Courtesy of Tullow)
ICC, Slide 3, 31 October 2007

4. Upstream project concept (Courtesy of Tullow)
ICC, Slide 4, 31 October 2007

5. Challenges
ICC, Slide 5, 31 October 2007

6. Kudu Project – Challenges
The Kudu project as base load gas to power consists of three components:
supply of gas;
conversion of gas to power;
off-take (sale and purchase) of power.
Without agreed terms of commercial arrangements between the components there can be no further development of:
financing arrangements for the gas to power component;
technical arrangements of any component.
Agreement of commercial terms and conditions is challenged by mutually acceptable:
allocation of foreign exchange risks;
acceptable liability regime (risk package); and
price levels.
ICC, Slide 6, 31 October 2007

7. ICC, Slide 7, 31 October 2007

8. Unlocking value of gas The base load Kudu project consists of :
supply of gas to a power station in Namibia;
conversion of gas to power in Namibia;
transmission lines connecting the Namibian power station to the Namibian and South African grids for the off-take of power in Namibia to Namibia and South Africa.
The mid merit/peaking Kudu project consists of :
supply of gas to a power station in Namibia as well as to an import/export pipeline between Namibia and South Africa;
conversion of gas to power in Namibia;
transmission lines connecting the Namibian power station to the Namibian and South African grids for the off-take of power in Namibia to Namibia and South Africa;
import/export pipeline between Namibia and South Africa;
conversion of OCGT power station at Ankerlig to CCGT.
ICC, Slide 8, 31 October 2007

9. Evaluation: Power in Namibia, Excess Gas and Power to South Africa
Security of Energy Supply (Electricity and Gas)
Power Station in Namibia
Power Supply to Namibia during non-generating hours
Bi-directional pipeline
Value of Project including Speed of Implementation, Cost and Risk of Electricity Supply
Consistency with GRN Energy Policy
Strategic Benefits to Namibia and region
Macro-economic Benefits to Namibia and region
Kudu CCGT PS
Ankerlig CCGT PS
690 km Gas
Pipeline with compression
Kudu Gas Field, Offshore Pipeline & Conditioning
ICC, Slide 9, 31 October 2007

10. Kudu Power Project Plan
1st Quarter 2008: Final Investment Decision
2008: Construction Starts
5 July 2004: Signing of JDA & MOU, Feasibility Phase Started
2011: Commercial Operation
ICC, Slide 10, 31 October 2007

11. GRN supporting development of Kudu
2004:
Cabinet declared project of National Importance, Ad Hoc Cabinet Committee on Kudu Established
2005:
Cabinet approval for NamPower’s investment in strategic projects
2006:
Cabinet approval for GRN equity injection into NamPower to develop Strategic Projects - Budgetary allocation
Cabinet approve establishment of re-enforcement team to assist NamPower in negotiation
Heads-of-State meeting pledge regional support to unlock value of Kudu
2007:
Heads-of-State meeting re-emphasizes support to development of Kudu
Bilateral Gas Trade Commission tasked task force to identify areas of support and facilitation required to progress Kudu
ICC, Slide 11, 31 October 2007

12. Benefits of the Kudu Project
Employment
during construction about 1500
operation about 70
Development of Namibian skills and experience
CCGT power stations
infrastructure of similar type and scale to the Kudu CCGT power station
international projects generally
Catalyst for general development investment in local area as a whole
Housing and Accommodation
Office facilities
Roads upgrade
Harbour Facilities in Luderitz for landing of equipment
Electricity, Water, Sewerage, etc
Medical and Emergency Services
Secondary Industry :Cleaning Services, Catering, Trade, Maintenance of Vehicles, Transportation, Recreational, Tourism, etc
ICC, Slide 12, 31 October 2007

13. Conclusion
Growth in the Namibian economy caused and requires growth in electricity demand, out stripping the current supply options
Kudu Power Project is a generation option in Namibia to ensure the availability of reliable electricity supply
Kudu Project will kick-start economic growth given its massive investment
Kudu Project supports Namibia’s vision and objectives in advancement through Technology and Innovation
The commercialization of gas onshore will be a catalyst to the development and growth in the gas industry
Kudu Project requires multi-sector, inter-ministerial, inter-agency and inter-governmental support and co-ordination
Getting it right will instill investor confidence in the region
ICC, Slide 13, 31 October 2007

14. Thank You
ICC, Slide 14, 31 October 2007

15. Integrated Project Structure
NamPower & Others
NamPower
Eskom
Eskom
Gas in Pipeline
Spec Gas
Power
Wet Gas
Gas to Power
Power from Gas
Kudu Power Station
Namibian
Trans- mission
Grid
RSA
Trans- mission
Grid
Ankerlig
Power
Station
Tullow & Itochu & Namcor
Gas Field
Offshore Pipeline
Gas
Treatment
Facility
Import/Export Pipeline
PipeCo
ICC, Slide 15, 31 October 2007