COMMON SENSE ON SA FUELS POLICY

WHEN a Green Guru goes for nuke power

2008-03-05T11:51:00.001+02:00

If those who worship at the shrine of Gaia are susceptible to logic (any many doubt it) the fact that one of the founders of Greenpeace is now openly advocating a switch to nuclear power, should make them start thinking. Dr Patrick Moore was in Johannesburg this week and had some harsh truths to tell. Among them the following: "I find it logically inconsistent for people in the environmental movement who say that climate change threatens the very existence of our civilisation, and threatens to drive millions of species into extinction, and then they are opposed to one of the most important technologies that could bring about a resolution to that problem - replacing fossil fuels with nuclear energy," and… "People all around the world are watching this PBMR (pebble-bed nuclear reactor) research and development with anticipation, as the high temperature reactor being constructed here will have applications in industry and technology that the conventional light water reactors simply cannot do, as it will produce a higher temperature of steam and be capable of producing hydrogen directly. Because it is modular, it will also be suitable for a lot more applications than these large 1000-MW-plus reactors. It is going to be a very important technology for the future." Once again we can thank Engineering News for a full report on what Moore said. You will not find as full a report in any other media. I wonder why?

Uncle Raymond goes in to battle for the housewife … not.

2008-02-06T10:49:00.001+02:00

UNCLE Raymond Ackerman, the housewives' friend who used to be fond of referring to "she, the consumer" is never slow to see the movement of a bandwagon, or a slouch when it comes to jumping on it. So it comes as no surprise that the old chap has seen fit to once again roll out his old attack on the regulated pump price of petrol and diesel. To put it his way, all will be well if only the pump price of petrol and diesel were free to go up and down. "Our stance on price fixing and monopolies is born of a fundamental belief in the free market, and the benefits for consumers that accrue from vigorous competition. This is particularly the case in a developing economy, where growth is at the top of the agenda, particularly now," says Ackerman. "Any deregulation of a basic commodity is always great for consumers, who buy fuel as regularly as groceries," he noted -- and thus revealed Pick 'n Pay's true motive. You see, dear readers, Uncle Raymond wants the pump price of petrol and diesel to be de-regulated so that he can build massive petrol stations outside his supermarkets. There he can offer cheap petrol and diesel to lure housewives to his stores. Will his super stations employ pump attendants? Well, perhaps, to begin with -- until dolly birds in short skirts bring in more drivers or until the first wage dispute, whereupon, with unctuous reluctance, self-service will be introduced. What will happen to all the mom and pop service stations so conveniently situated in our neighbourhoods? Alas, they will go to the wall and the pump jockey jobs will go with them. And what about the price of fuel in, say, Agenys? Ah, the price there will go through the roof, as will any farm produce from similar rural areas. Finally, you can kiss your caravan holidays goodbye. You may be able to fill up your vehicle on the coast, but the further you travel inland, the higher the price will climb until -- if you are not careful and go too far -- you might need a bank loan to buy fuel get back. Thank you, Uncle Raymond.

The truth on Escom is out

2008-01-25T00:51:00.000+02:00

AS USUAL Engineering News, rather than the daily and weekly newspapers (which seem increasingly to be written by children) has produced the best reporting on the energy crisis. Using simple logic and arithmetic, Engineering News has asked why it was possible last winter for lights and heating to continue uninterrupted (when July's demand was a record 36 513 MW), whereas present peak demand is only 33 000 MW. Good question. The answer is not, as everyone (including Spigot) thought, the fault of the Government refusing to sanction enough new power stations in time. No, it's because of "unplanned maintenance and maintenance slippages". No less than 20% of our generation capacity is out of service. About 3 000 MW of capacity is out for planned maintenance, and 5 000 MW is down for unplanned maintenance. To coin a phrase this is the drol in die drinkwater. Putting it another way, the daily shortfall is because Escom could not organise a booze-up in a brewery -- or, clearly, a proper maintenance schedule with built in contingency plans. Spigot recalls that Escom's management inherited massive and well-oiled kit from the previous regime of white males who, whatever their other failings, knew how to plan and look a bit further ahead than their next pay check.

Hot air Marthinus

2008-01-23T10:14:00.000+02:00

While the headlines are dominated by the electricity crisis and the world confronts huge economic issues, that master of hot air CO2 emissions Minister Marthinus ‘Kortbroek’ van Schalkwyk, is obviously feeling sidelined. His latest hectoring sermon of green rectitude tells the United States to come to the table on global warming and curb its CO2 emissions. This is rich from a man under whom environmental assessments have become a bureaucratic art form that stops development; a man who presides over an environmental department in a country with the third highest per-capita CO2 footprint on the planet. But our Marthinus has clearly learned two valuable lessons during his stint(s) in the public eye: a. Always blame a third force - just like Uncle Bob. a. When the shit hits the fan, stick your neck out on things nobody gives a shit about

Too much power leads to no power

2008-01-23T09:21:00.000+02:00

BY NOW just about everyone should know that no less a person than the State President has apologised ( so that's all right, then) for not allowing Escom to build new power stations. It was a supremely arrogant and ignorant Cabinet decision. Taken some seven years ago by people who, it must be said, knew nothing whatever about electricity supply and its key role in the economy, the result is the cock-up we are now facing: power cuts played out across the country like a bizarre game of Russian roulette. Less well known is the intervention of another group of unqualified, arrogant and ignorant people. The actions of this group has made getting out of the energy crisis even more difficult. The group is called Nersa for short. For those with a sense of humour the group's full title is The National Energy Regulator of South Africa. Actually it's just another bunch of self-important bureaucrats. In its wisdom, Nersa refused Escom's request for an 18% increase in tariffs to fund much-needed capital projects like new power stations. Nersa only "granted" Escom a 14, 2% increase. Don't you just love that 0,2 %? It makes it look as if they knew what they were doing. As Voltaire once said (tongue in cheek) freedom will only come when the last noble has been strangled with the guts of the last priest. Try substituting bureaucrat and politician for a modern pearl of wisdom. Perhaps it is a case of too much power in the hands of the ignorant and arrogant leading to no power in the hands of anyone?

Bureaucrats can never fail

2008-01-14T10:30:00.000+02:00

WHEN bureaucrats make a cock-up, they don't get fired, they get re-assigned or they invent a bureaucratic solution to the problem. So it seems from the admission by the European Commission ( Daddy of all Bureaucratic systems) that they got it wrong in promoting a whole range of bio fuels in the belief that they would curb dreaded CO2 emissions. It now appears that many of these green fuels do more damage -- or at least as much damage -- as horrible old petroleum products. Not to worry, the EU is now planning to license bio-fuels so that only approved ones with the correct carbon footprint will be permitted to reach the market. Who will oversee the licensing? Why, the EU itself, of course.

Take a lesson from Malaysia

2008-01-14T10:22:00.000+02:00

IN Malaysia a jump in palm oil prices has brought the bio-fuel industry there to a halt. Malaysia, a large palm oil producer, licenced 90 companies to set up bio diesel projects with a capacity of nearly 10 million tonnes, or some 200,000 barrels per day. Now it has seven plants running below capacity. Even oil prices at $100 a barrel aren't helping. More than a dozen bio diesel plants have been delayed. Oh, by the way, they are calling for subsidies for bio fuel already. The siren song of every inefficient, unprofitable enterprise since time began.

Nuclear facts, not fiction are needed here

2008-01-14T09:59:00.000+02:00

Listen up South Africa. Britain is planning to build a whole raft of new nuclear power plants. France already gets 80 per cent of its electricity from nuclear plants ( and even has enough to export to Germany). The so called Three Mile Island nuclear meltdown was nothing of the sort. Nobody died. None of the neighbours developed cancers attributable to the very small leak and despite all the hype about the China Syndrome ( the scare story of the day was that the core of the reactor would burrow through the earth all the way to China) the Three Mile Island plant is still there providing electricity. Yes, Chernobyl was a disaster. Yes, people died. Those who died were the brave firemen and others who capped the reactor with concrete -- not the neighbours, near or far. The area around Chernobyl was evacuated but, hey, guess what? Animals returned and are happily grazing and living without glowing in the dark or producing offspring with three heads. Chernobyl was a Russian-designed and built plant, erected during the Soviet era and its main purpose was to provide fuel for bombs -- with electricity and safety a very secondary consideration. No one would have dared build one like it in the West. So, now you know enough to judge the hysterical noises now coming from Earthlife Africa in an attempt to block Escom's plans to build new nuclear plants in South Africa. There will be more green lies and exaggerations. Keep cool and remember, they are trying to scare you.

If Biofuels could grow like weeds…

2008-01-14T09:54:00.000+02:00

This is by SCOTT CANON of the The Kansas City Star: "There was a time when planting Johnson grass in the United States seemed like a good idea. Brought from the Mediterranean in the early 1800s as a forage crop, Johnson grass practically planted itself. Its leaves could stretch 10 feet high. It adapted easily to virtually the entire continent. Which turned out to be precisely the problem. Today it’s a scourge, a fast-growing grass that crowds out native plants and forces farmers to spend billions in a losing anti-weed battle. And it offers a lesson for agricultural scientists looking for the right plant to convert into renewable fuels like ethanol. Preferably, the plant would produce a maximum of bio fuel with a minimum of effort. Ideally, it would flourish without fertilizers, be a perennial that shoots back to life on its own every spring and require little more than that a farmer cut it down and haul it to an ethanol plant. Like Johnson grass...." OR , says Spigot, like Dagga… think about it. It grows like hell in KwaZulu Natal, the former Transkei and Swaziland. No one need be trained to grow it. There already exists a sub-continent-wide distribution system. All we need is a genetically-modified version which contains no cannabinoids and we have a "green" solution to our energy problem, a brand new source of tax revenue and -- at a stroke -- a legitimate new industry employing thousands. Oh, and the fibre can make rope, and virtually indestructible cloth. Now Spigot knows there is some ongoing research into a drug free verion of dagga, but why the hell isn't money being thrown at it?

bio-foolishness?

2008-01-11T00:14:00.000+02:00

Given South Africa's drought stricken climate it is no surprise that our farmers are inveterate gamblers, nor that -- being gamblers -- they are attracted to the idea of producing bio fuel from maize and other crops. If farmers want to risk everything on a maize crop to provide feedstock, that's their lookout, but they should take a good look at what is happening in the United States before hocking the family farm. The latest news is that an American alternative fuels company is close to commercializing technology to make bio-gasoline fuels from algae or animal fats, and to produce transportation fuels identical to petroleum jet fuel, diesel and petrol. Translated, that means they are not producing ethanol to mix with traditional petrol but the real thing.

Climate change boondoggle

2008-01-10T09:51:00.000+02:00

Ah, summer is here and February ( always the warmest month) is just around the corner, so stand by for scary tales of climate change and global warming. "Hottest February since records began" is bound to be a headline somewhere in the southern hemisphere as is something like "Man-made global warming poses threat to world peace". The usual bullshit about a " consensus of scientists" agreeing that man made emissions are the main culprit, will be written and no doubt some of the more sensitive souls on the planet will pull duvets over their heads and sink into a slough of despond. Here, to help readers face the horrors are some factoids that just might keep the flame of honest doubt burning. 1.There is no consensus of scientists regarding man made global warming -- or if there is, it is certainly not made up of meteorologists. Anyway a consensus of scientists ( if there is one) does not mean they are right. In 1911, a consensus of scientists in Britain predicted solemnly that by 1940 London would be knee- deep in horse manure. 2. The world might be warming a couple of degrees but if it is --and if it does --it is not something to panic about. In 900AD the world was a couple of degrees warmer than it is now and people lived, animals flourished and wheat and cattle were being raised in Greenland. The Romans, 800 years before than, even, were growing grapes as far north in England as York. (Try that now!). 3. Historians among my readers might like to notice that 900 AD predates industrialisation and filthy capitalism. 4.Computer projections of future global warming are based on some figures collected on instruments which vary tremendously in sophistication -- 18th century thermometers; Victorian amateur weather watchers tables etc. GIGA applies ( garbage in, garbage out). 5. The latest 2006/07 figures show no appreciable rise in world temperatures, by the way. So, don't worry folks. The world is not about to fry your brains. And, by the way, there are a great deal more of these facts that the global warming fanatics fail to tell you.

Regulate, regulate, regulate! Knee-jerk!

2008-01-07T09:59:00.000+02:00

WHY is it that politicians still think -- despite all the evidence of the last 100 years -- that regulations on economic activity can benefit and enrich the ordinary citizen? The truth is there for all to see: the more regulations there are, the less chance there is of anyone risking money to make more ( and therefore employ more people who will, in turn, pay more taxes). The fewer the regulations; the fewer the bureaucrats needed to enforce them; the greater the chance of an entrepreneur willing to take the risk of setting up a new business, building a new factory etc etc. Quite the best example of the dead hand of regulation is our very own National Energy Regulator (Nersa). Does Nersa produce energy? No, it does not. Are Nersa members experienced, trained people from the energy industry? Not many, is the answer. Who pays Nersa employees and covers the cost of this establishment? Why the energy industry itself in the form of an enforced levy or tax. What a wonderful scam! Result? The dead hand of bureaucracy rests heavily on the South African energy scene. Take the hand off and see what will happen. People will risk. People will invest. Some will fail, but the best will succeed -- an in doing so benefit everyone.

AT LAST, SOMETHING REAL

2007-12-14T08:34:00.000+02:00

At last there is something real (and realizable soon) on our beleaguered energy front. The Central Energy Fund, NT Energy UK and Bataung Strategic Investments are to form a joint venture (JV) to invest US$10 billion to extract coal bed methane to power generators. The JV is to be called GasCo and it will explore for methane in coal beds in Limpopo, Free State and Mpumalanga provinces. What makes this announcement different from all the others we have had in the last year is that is doable, believable -- and it could be quick. Coal bed methane and the conversion of this gas to liquid fuels could provide a real, clean and long-term addition to South Africa's energy needs. It would reduce reliance on imported energy, cut energy costs, boost employment and is environmentally friendly. Drilling to confirm coal deposits in the Free State began in August and has already found massively thick coal seams. Drilling has also begun in Mpumalanga. Next year it is Limpopo's turn. Go for it, manne.

NEVER MIND MAIZE, LOOK AT ALGAE!

2007-12-13T09:04:00.000+02:00

WHILE the Gadarene throng rush off to join the bio-fuel bubble, pinning their hopes on maize, sugar, canola or jatropha, Shell Oil have quietly joined up with those looking at a far better prospect -- marine algae. Shell's geek partners in this are HR Biopetroleum and together they are forming a joint venture (JV) to be called Cellana. The JV will build a demonstration plant in Hawaii to find out which algae produce the highest yields. But why algae? Well -- and listen closely Cabinet members --because marine algae can be grown in sea water ponds and not use up agricultural land and fresh water. It also doubles its mass several times a day and produces at least 15 times more oil per hectare than alternatives such as rape, palm soya or jatropha. Better still, algae soaks up CO2 -- important to those who believe in the new religion of climate change. Fear not. The world will not come to an end soon -- even if we do run out of oil some time this century. More to the point, we do not need the Reverend Al Gore and others to form a new priesthood to govern us all. Man's ingenuity is a far better bet to come to the rescue.

Transformation

2007-12-10T08:32:00.000+02:00

One of my generally-shy readers has taken exception to my comment on the fact that recent plans to expand our fuels infrastructure are remarkably light on financing details, and some seem to be spending an awefully lot of money on planning, pre-planning and pre-pre-planning. Spigot is anti transformation, he says. Spigot is white, he notes. QED. Well, is he? Blogs are colour blind unless my skill with words indicates otherwise. So, one who can spell ( sometimes) is ipso facto white? Now, that is a racist thought. Do I object to what I see as a wast of money? Oh, yes. Especially if the wastee is a parastatal organisation using taxpayers' money. Do I object to fake overseas training programmes for previously disadvantaged people -- programmes clearly offered as a sweetener to secure megabuck deals? Yes, sir. I would much rather see people properly trained right here. South Africa is not a colony, grateful for the help of its previous old or new wannabee,masters. A corporation in Houston is no better and no worse than a corporation operating right here. The fact that it is in Houston doesn't make it better. To think so is genuinely colonial-- as is an obsession with colour.

King Canute -- the first socialist?

2007-12-07T11:24:00.000+02:00

WHEN King Canute of England (actually he was a Dane) thought he was so powerful that he could turn back the tide, he got his feet wet. He was the first socialist, believing theory was more powerful than the law of nature. Here in South Africa we have our own Canutes. They believe that by issuing lofty decrees, market forces can be " managed". Latest example is the purported ban on maize being used to make biofuels, theory being that if it is allowed the price of bread will rise. Ho, hum. Someone should do Economics 101. You see, children, if the price of maize goes up because bio fuel refiners demand more of it than can be supplied, more will be produced. Keeping the price of maize low by Government Fiat (which a ban on its use as biofuel will do) will simply mean farmers will grow something that is more profitable to them. Less maize produced will lead to a higher price for a while until the balance is restored.

Oh, Engen, Engen, Engen!

2007-12-07T11:11:00.000+02:00

WHO would have Herb Payne's job? Herb, poor fellow is Engen's spokesman and yesterday he had to stick his head over the parapet to explain away yet another fire at the Engen refinery. This time it was a pretty small one, but any fire in the flammable atmosphere of an oil refinery is bad, bad news. What's up? Well, as Spigot recalls, the Engen refinery was formerly the Mobil one. It was the first to be built in South Africa, more than 50 years ago. Now, even big pipes wear out. After a certain point even the best maintenance regime is not enough. Mobil knew this more than anyone so when the opportunity to exit South Africa covered in anti-apartheid glory, came, Mobil took it, leaving new owners to face the capital crunch coming down the track. And here we now are.The Engen refinery needs a total overhaul. Who will pay this kind of money when we have a national Energy Regulator consisting of amateurs or ideologues and a Ministry of Minerals and Energy rapidly being stripped of any expertise it once had? Solution? Not more regulation but less. Not politically correct attempts to " manage" the oil industry either by stuffing it with people with not much more than pigment in their favour, or supporting hopelessly expensive and untried biofuels plans. Let the market decide and leave it at that. The fire yesterday, which broke out at the refinery's vacuum unit and was extinguished in 10 minutes, followed a massive blaze at the refinery two weeks ago. Thankfully, there were no injuries.

Now to find some farmers

2007-12-04T10:34:00.000+02:00

Zimbabwe has commisioned its first biodiesel plant. Costing US$80 million ( where did they get the money?) the plant allegedly has a capacity of 100 million litres of biodiesel annually using as raw material, cotton seed, soya beans, jatropha and sunflower seed. Right. Who will produce these crops? Spigot asks because at least two of them are food and likely to be eaten first. Unless, of course, old Bob himself is going to be the farmer. It might work but a safer bet is to start raising donkeys for hauling work. They can live off the veld. They reproduce like crazy as well. A bit slow though.

SHOW SOME RESPEC, MON

2007-12-03T11:20:00.000+02:00

It had to happen. The language of the Black American Ghetto has come to South Africa. Some Black people now feel "disrespected", according to reports emanating from Durban. We are all going to have to learn what that means. First to meet the challenge will be Engen, Sapref and Mondi who all have plants in the Wentworth area south of Durban and -- thanks to incredibly stupid town planning -- a large amount of sub-economic housing on their doorsteps, complete with occupants who are only too willing to be cannon fodder for the environmental lobby. The latest gambit by this lobby is an attempt to mount a class action against Engen, Sapref and Mondi. No doubt this will accuse these companies of wilfully polluting the atmosphere and causing all manner of illnesses among their neighbours. In the process the coffers of the environmentalists will no doubt swell most satisfyingly -- if not during, certainly after, a successful suit. Spigot is not sure of the history of Mondi in this area but he is aware of Engen's and Sapref's. In both cases their plants were put up at a time when all around was swamp -- not a sub-economic council house in sight. Not a school, not a crèche; nothing. It was thanks to the "liberal" Durban City Council, that the next 40 years was spent packing in council housing. Do the neighbours of Sapref, Engen and Mondi complain to the Council? Do they hell, the Council is not nearly as rich. Leaders of the pack in the attacks on the three companies are known to Spigot as former residents of the area. Spigot wonders if they still do.

Project Mthombo lurches forward

2007-11-29T10:13:00.000+02:00

Kellogg Brown Root said yesterday that it had the contract for a pre-feasibility study on PetroSA's US$6-billion crude oil refinery planned for Coega. In doing KBR let slip that if all goes to plan the proposed 200,000 barrels a day refinery (Project Mthombo) will come on stream by 2014 to 2015. Does Sep Blatter know? More to the point, will the World Cup soccer fans we expect to host in 2010 know that we are going to move them around by donkey cart? Of course, we won't. We will just continue to import the stuff at heaven-knows-what price. The Law of Unintended Consequences strikes again. You see, dear reader, all those years of calling for oil sanctions may not have worked in one sense, but they did in another -- none of the oil companies were too keen in investing in new kit. Only now are we paying the price. Still, if Coega's refinery does get closer it will be a good thing. It will be even better if we all knew that the finance was lined up from a source other than the South African Exchequer. Some say it is the Venezuelans; others the Brazilians. Either way, it is all rumour. Given the nervous state of the international banking system, there will have to be cast iron assurances if it is to be the source of the money. Some say Sasol's new plant will come to the rescue and plug the gap. Spigot's comment:"Fat chance".

THAT ENGEN FIRE and other matters

2007-11-23T09:42:00.000+02:00

Engen refinery head honcho, Willem Oosthuizen, has been drawn on the possibility of shifting the plant (or some of it) or expanding it to the land that will be made available once Durban's airport shifts to La Mercy by 2010. Building a completely new one, he said was not possible because building a new refinery would cost between R15-billion and R20-billion. Hm... that should make the Richards Bay and Coega wannabee refiners sharpen their pencils. Or, are we actually all looking at Government in some shape or form to come to the party -- as was the case with Sasol and Mossgas? Watch this space taxpayers! Sasol has already twisted the Government's arm over the Waterberg (or Free State ) expansion. Once a subsidised entity, always a subsidised entity. So much easier than risking your own money.

THE SKY IS FALLING IN …THE SKY IS FALLING IN…

2007-11-22T10:27:00.000+02:00

THE USUAL hysterical media reaction to the two recent fires at petroleum storage facilities in Durban … speculation that we would run out of petrol over Christmas (no we won't -- at least not because of these fires) … nearby residents being dramatically taken to hospital with respiratory problems (followed closely by certain kinds of lawyers, no doubt)... the usual, smoozle. Anything to have a go at the oil industry,. Spigot would like to remind people that in the case of the Engen fire, it was lightning that caused it, a.k.a. an Act of God, so good-bye law suits. By the way, the Engen Refinery is the oldest in the country and probably would have been kept in better repair had it not been abandoned when previous owner Mobil skipped the country, thanks to anti-apartheid pressures. The people claiming to be affected by smells and what not from the Engen Refinery were placed there AFTER the refinery was built. One other thing, both the Engen Refinery and the Sapref Refinery will probably have to expand once the airport is moved away in time for 2010 and the world cup. This expansion will be cheaper and quicker than all the other fancy, pie-in-the-sky plans for new refineries in Richards Bay, Coega, the Waterberg and so on, and so forth. Judging from the time it takes to get the National Energy Regulator to approve things, it may well turn out to be the only way we are going to supply enough petrol and diesel fuel in 2010.

HERE COME THE INDIANS!

2007-11-21T09:13:00.000+02:00

NEWS that Reliance Industries of India has bought a majority stake and management control of East African oil retailer, Gulf Africa Petroleum Corp (GAPCO) should make BP Tanzania consider their options. The good old days of an almost captive market and an overwhelming BP majority of market share have long gone, but, with demand for petroleum products rising quite rapidly in East Africa, the temptation to say, "Stuff it" and get out of Tanzania altogether may not be the no-brainer it once seemed. Even so, Reliance as an alternative refiner to Sapref will offer severe competition. For one thing, the East African markets are within easy reach of India. For another, GAPCO owns and operates large storage terminals and has a retail network in Uganda and Kenya as well as in Tanzania. Reliance is India's largest private company. It operates a 660 000 barrels a day refinery (bpd) and is building another of 500 000 bpd unit. Come to think of it -- and given the hassles of operating in Tanzania -- why not say, " Stuff it" after all, and flog the lot to Reliance (including that old albatross of a refinery in Mombassa)? Are you listening Mr Hayward? This could be your chance to extract BP from that dangerous place called Africa. Less hassles from the Safety Nazis. Less chance of another Texas City or Alaska pipeline spill. Might even be able to dress up a sale as empowerment. Gosh!

LET 'EM LOOSE

2007-11-09T08:40:00.000+02:00

IF ever evidence was needed to prove the obvious -- that private initiative and the profit motive were the prime engines of change and progress -- South Africa's energy crunch provides it. Since it became generally known that economic growth and poor planning in the last ten years meant a massive and growing energy gap, every man and his dog have come up with a plan; pipeline companies have sprung up; plans for refineries have been announced; power station plans have been unveiled. You name it, there is someone planning it. Of course, there are some chancers among those who plan to fill the energy gaps. And some of them seem to be coy about where the money will come from. But there sure is a lot of mental energy being directed at the problem. The latest announcement is that Sasol plans a R2,5 billion gas-fired power station at Secunda. The gas will come from Pande in Mocambique. The money will come from the cash Sasol has been accumulating from its stranglehold on the inland fuels market. All this is good news, of course, but how much will turn into facts on the ground is another mater. Timing is an issue too. For reasons Spigot can never quite fathom, we still place massive bureaucratic hurdles in the way of people willing to grow our economy. There are reported to be 100 different schemes to build co-generation power plants. Why not just let them get on with it? Silly question.

Who is kidding who?

2007-11-08T10:56:00.001+02:00

WHEN consultants blame Governments for delays that are harming an industry that does not yet exist, Spigot smells a large rat. So it is with the so called bio fuels industry (one hardly-used and now mothballed ethanol distillery near Bothaville) which is being hyped to death to the extent that consultants think a boom in fees is coming their way. Consulting company Frost & Sullivan , while complaining of delays by Government, is contributing mightily to the hype by claiming this week that, "the South African bio fuels market could earn revenues of $872-million in 2010, and over one-billion dollars in 2013." Mmm. Don't count your chickens, chaps. It added -- and note the use of the subjunctive --"Bio fuels could play an important role in stimulating economic activity in agricultural communities and boosting employment..." Could, not will. The consultancy did say that while the South African bio fuels market was "currently only theoretical". Just a grain of truth there.

French people do not glow in the dark

2007-11-06T09:12:00.000+02:00

Looks like the Greenies have finally been sidelined on the nuclear issue. Eskom says it plans to have its first new nuclear reactor in South Africa up and running by the middle of 2015 and therafter other nuclear reactors EVERY SIX MONTHS. Ho, ho, that must mean that Eskom is banking on the pebble bed reactors being ready to go by then. Guess they must know something more than the amateurish types who made the anti-nuclear documentary aired on Carte Blanche on Sunday. Embarrassing to watch, this self-indulgent nonsense paraded the usual suspects and allowed them to repeat all the ill-informed alarmist BS that pass for articles of faith among environmentalists. The Three Mile Island incident was compared with Chernobyl -- which is like comparing apples with olives. No mention of the fact that the Three Mile Island incident neither killed nor injured anyone. Radiation victims of the Hiroshima bomb were shown as proof of the dangers of nuclear power generators -- which is like comparing a teaspoon of gunpowder with an artillery shell. No mention made of France where for years 80 per cent of its electricity has been provided by nuclear reactors.. As far as Spigot knows, French people do not glow in the dark.

Algae – not a bio fool

2007-11-05T11:42:00.000+02:00

Is South Africa having second thoughts about jumping on the bio-fuels bandwagon (or boondoggle) -- take your pick? Let's hope so. Only Jatropha so far holds out the hope of a non-food crop we could grow to produce bio-diesel and even it has huge risks in a drought ridden continent. Using maize is plain foolish. As is using any other food crop. But there is another potential way -- to use algae. Our own Council for Scientific and Industrial Research (CSIR) is now reportedly aiming to develop a process for the production of biodiesel from algae. "Algae have long been known to produce lipids (a type of fat) that can be used for biodiesel production," a spokesman is quoted as saying this week. Its other advantages are that it does not use arable land. And it grows in waste water ie industrial and domestic effluent. Go for it manne!

CONSULTANTS JUST LOVE US

2007-11-01T11:16:00.000+02:00

CONSULTANTS just love South Africa. We have been such a goldmine since 1994. Every time one of our politicians or newly-appointed civil servants gets an idea, the consultants move in to see if it is viable, raking in hefty fees all the while. PetroSA is the latest money tree. Having announced last week to Parliament that it intends building a massive new oil refinery at Coega in the Eastern Cape (remaining remarkably coy about where the money is going to come from) PetroSA yesterday had a signing ceremony in Cape Town to announce the awarding of a (wait for it) "pre-feasibility study" to Kellogg Brown & Root. Only after this is completed will there be a feasibility study… Meanwhile, some suitably previously disadvantaged persons will have a pleasant time at company expense in KBR's offices in Houston, USA. So once the pre-feasibility study is done and the feasibility study that follows it is complete, there just might be something with which to attract investors. Oh, I forgot. Venezuela is going to invest...

Eskom inches closer to building a new power station

2007-11-01T09:06:00.000+02:00

Eskom has signed the much-anticipated boiler and turbine contracts for a R78,6-billion Medupi coal-fired power station in Limpopo Province. It will be the first to be built in South Africa in more than 20 years. For some reason best know to the spin doctors, the names of the successful bidders have not been revealed. But Spigot cheers anyway for news of something concrete happening on the energy front.

At last, a hard fact on Coega

2007-11-01T08:53:00.000+02:00

THIS is an important day in the continuing saga of who is going to build a new crude oil refinery in this country. Why? Because the PetroSA spokesman let slip in Business Report this morning that the main difference between Drako Oil's plans for a refinery in Richards Bay and the PetroSA plan for one in Coega is that " We have R11 billion in cash in the bank." Ho,ho! Now are we poor taxpayers to imagine that all this R11 billion is earmarked for the Coega thingummy? If so, where is the rest of the R34 billion coming from? Still, reference to actual money-- and in a bank, at that -- is welcome amidst the swirls of hot air circulating around the matter. Spigot hopes the spokesman didn't "mispeak" as the Americans would say.

Good heavens, court documents have been found

2007-10-31T09:44:00.000+02:00

THE power of the Press might yet save us all. Out of the chaos of the Johannesburg Court system has emerged the "lost" docket with details of the PetroSA case against Imvume. Spigot readers will recall that PetroSA lent Imvume some R18 million to buy crude ( some sweetheart deal that!) but oh dear, Imvume didn't buy crude at all and some say they gave a huge chunk of it to the ANC. Anyway, PetroSA says they have recovered some of it but are suing for the balance plus interest. Now, if the Press had not told the story of the missing docket, would it have been found so swiftly -- if at all? Makes you think.

So, you have R39 billion to invest in SA?

2007-10-31T09:41:00.000+02:00

"I think, therefore I am," used to be a good description of the human condition. Not any more. South African parastatal managers now appear to have replaced it with," I speak, therefore I think I am." How else does one interpret the latest verbal ballet around plans for a refinery at Coega? Vague references to Venezuelans apart, who the hell is going to invest R39 billion in a) The Eastern Cape, a province known to be the most inefficiently and corruptly run in South Africa? b) in South Africa, a country whose next president might be an African chief with four wives who makes a habit of dancing on public platforms while calling for his machine gun?

Answer: Not many. And they are all dead.

THE CUSTOMER IS ALWAYS WRONG

2007-10-30T10:16:00.000+02:00

HAS anyone else noticed how Eskom is subtly shifting the blame for its appalling lack of planning in the last ten years onto the shoulders of the consumer? It's not Eskom's fault that there are power outrages, it's the consumer's fault for using too much electricity. Neat, isn't it?

NICE ONE, BUYELWA!

2007-10-29T08:59:00.000+02:00

SOMETIMES it is a good idea to keep your mouth shut. Spigot nearly missed a beautiful example of this when Minerals and Energy Minister, Buyelwa Sonjica, publicly warned that sabotage to the single-buoy mooring (SBM) off Durban would bring imports of refined products to a halt. Of course, there is a chance that this was an example of misreporting, but the facts are that the statement is wrong on two counts. Firstly, the SBM is used exclusively for crude oil, not refined products. Secondly, trumpeting the vulnerability of the SBM to sabotage, seems somewhat foolish in this modern world. Isn't there still something called the Key Points Act on the statute book?

PetroSA's DEFINITE MAYBES

2007-10-25T10:48:00.000+02:00

ON closer analysis, PetroSA's headline-grabbing announcement that it plans R39 billion refinery in Coega looks like something out of Alice in Wonderland. There are so many caveats that intelligent readers could be forgiven for thinking it is all smoke and mirrors, rather than news of a genuine strategic investment. For example: Venezuela's state-owned crude oil supply company is said to be in line to invest. What does "in line" mean? Not yet at the head of the queue? Are there others queuing up who are too shy to be mentioned? If so, why are they shy? Here's another: Chief executive Sipho Mkhize says PetroSA would seek equity partners. Oh, still looking then, are we? And another: (The plant) would be seeking support . So that means there is not yet enough support for the project, except for the aforementioned Venezuelans, whose support is clearly not enough eitherand even doubtful because Mkhize would not expressly confirm that PetroSA was seeking an investment from Petroleos de Venezuela. Even Coega as the site is iffy. According to Mkhize: "no final decision has been made of the location".Same goes for the pipeline from Coega to someplace inland. PetroSA "would talk to Transnet about the construction." Would? Not happened yet, then? Finally, this announcement doesn't appear on the PetroSA website. So, either it is all a load of you-know-what, timed for the December conference of the African National Congress or Mkhize has been cleverly trapped by the journalist writing the story. If so, he should be looking for another job. To be sure, Mkhize seems to have tried to tell the truth when he coyly mentioned the global shortage of equipment as well as technical and refinery construction skills. Another way of saying:" I am being forced to make this highly premature announcement for political reasons but I am afraid to say so in case I lose my cushy job?"So it is all a definite maybe then.

Poor Administration or Conspiracy?

2007-10-23T10:40:00.000+02:00

For the second time in two months the utter chaos that is the Johannesburg Court system has allowed the Petrosa case against Imvume to lag. Spigot is beginning to think that you can use the poor adminstration of the courts to simply make cases dissapear -just in time to save embarrassment ahead of the ANC leadership indaba.

Chalk and Cheese

2007-10-23T10:05:00.000+02:00

SPIGOT wonders if anyone else has noticed the main difference between the successful Petroline pipeline application to the National Energy Regulator (Nersa) and the failed iPayipi application to the same August, unnecessary, body. Ipayipi in essence said this: "Give us the licence and then we will parlay that into finance and skills." An amateurish and transparently pathetic approach if ever there was one. Petroline on the other hand, first marshalled the finance, the expertise and everything else -- and only then applied for a licence (the right way to do it). Only now, has Petroline begun seeking customers. They have something to sell, unlike Ipayipi who seem all along to have had nothing except the kind of empty promises that are expressed like this: "Of course, we will use your pipeline when you build it! We are totally in favour of competition! The more pipelines competing with each other, the better, old boy!" Not the same as saying we will back it with our money, of course. Spigot almost feels sorry for the iPayipi consortium -- but not sorry enough to back Mr Nather's demand for compensation for all the money he and his consortium spent on their pretty documentation that was submitted to Nersa. Greedy gambles sometimes win and sometimes lose. It's in the nature of gambling.

BIO-FUEL MEGA-POWER MOCAMBIQUE?

2007-10-23T03:41:00.000+02:00

MORE details are emerging regarding Mocambique's bio-fuels ambitions. The Agriculture Ministry now says the deal is with the Central African Mining & Exploration Company Plc (CAMEC) and worth a cool US$ 510 million. An ethanol plant will process 120 million litres of fuel a year, as well as fertilizers. The plantation supplying raw material will be of sugarcane planted on 30,000 hectares in Gaza Province. The fuel will be aimed at the domestic and regional markets, apparently. Take that into your calculations fellahs -- especially those of you claiming to be about to build conventional oil refineries. Mocambique meanwhile quite likes being described by some journos as a bio-fuel superpower with the potential for producing 3.1 million barrels of oil equivalent per day. Dunno about that. Remember the Groundnut scheme in the 1940s?

Sasol boosts Secunda production by 20%. A decade late.

2007-10-19T11:10:00.000+02:00

Sasol announced yesterday that it was boosting production at its Secunda plant by 20% by adding a new piece of kitt. If they had done this when every other refinery was doing the same thing, starting about 8 years back, the projected and current fuel shortages would have been staved off by a few years at least. No, at the time Sasol was in the throws of international acquisitions and used its Secunda expansion money for that purpose – funded by the taxpayer. Now the chickens have come home to roost and Sasol is adding 20% capacity – a decade late. Nice going guys. Congratulations on some really great planning.

NACALA REFINERY IS ON

2007-10-19T00:29:00.000+02:00

MORE solid news from Mocambique. The Mocambique Government and Ayr Logistics have sealed a US$5-billion deal to build a 300 000 barrels a day oil refinery in Nacala. The refinery will be 70-percent owned by Ayr Logistics. Some 450 Mocambicans will work at the refinery. They are going to need some foreigners to help build it and train the locals to run it, though. But, hell, this seems to be a no bullshit project. Direct foreign investment by a firm you have heard about and one that has a track record -- not a bunch of wannabees. Hooray.

WALVIS BAY TO ZAMBIA AND THE DRC BY RAIL

2007-10-18T00:31:00.000+02:00

LET'S all hope that the recent blip in the international banking system does not keep banks shy of lending money for ever. At least, that is what Namibia's officials must be thinking. They have joined the throngs of those announcing mega energy projects in our part of the world. This time Walvis Bay is the supposed recipient of the largess. Walvis Bay is that little inhabitable bit of the Nambian coast that used to belong to South Africa until we gave it to the Namibians as an independence present back in 1989. Walvis Bay, they tell us, will get US$ 200 million of foreign capital so it can expand its port faculties to handle imports to the -- wait for it -- the Democratic Republic of Congo and Zambia. (Hmm. Most of the imports to Zambia will be paid for eventually, but it may be wise to insist on cast iron credit guarantees for the DRC). What has this got to do with energy? Well, Walvis Bay oil terminal handles 60 per cent of Namibia's petroleum product imports. If the Namibian Government decides to build some strategic stock tanks plus a little spare capacity, what's to stop Walvis being the main entry point for Zambian and DRC fuels as well? Nothing, really, once the new railway line between Grootfontein and Katima Mulilo is built. Could this be the plan? If so, it's a nice one. If international finance is not forthcoming, the Namibian Government can always twist the arms of the oil companies….Everyone knows they have pots of money.

To the ridiculous (2)

2007-10-15T09:54:00.000+02:00

UNLIKE our neighbours, Mocambique, who make announcements of mega projects ( From the sublime) when they have lined up finance and other details, we in South Africa don't bother with such fiddling stuff. Take today's "great news" that we, and Namibia, may build a 30-MW hydro-electrical power station on the Orange river ( er, where exactly?) The main reason for this announcement seems to be to gain a place in newsprint for the name of South Africa’s Department of Minerals and Energy, chief director for electricity, one Ompi Aphane. " It is still a high-level concept,” Aphane said loftily. Details, (those bothersome things again) are still unclear, he added. This pie-in-sky was blessed by President Thabo Mbeki and his Namibian counterpart Hifikepunye Pohamba when they met in Pretoria. Ah, so that is why this " project" was announced. Flim flam to make the great men look important. No prizes for guessing which electricity generating project (ours or Mocambique's) actually gets implemented.

FROM THE SUBLIME (1)

2007-10-15T09:47:00.000+02:00

AT LAST, something real. Mocambique plans to build a $1,7-billion hydro-electric development on the Zambezi river. Construction of a dam in northern Tete province will begin in 2009 and be finished four years later. Planned output would be 1 300 MW. Funding for the project will come from China's Export-Import Bank. A US $2,3-billion transmission line will be built from Tete to Maputo and surplus will be exported to South Africa. Contrast this announcement by the Mocambique Government with our own a week later (To the Ridiculous)

A nasty nip in the air floors Eskom

2007-10-10T09:47:00.000+02:00

OK. So it is spring, traditionally a season of changeable weather. Sometimes, it has even snowed in the Cape in November. This year, however, an October cold snap came as such a surprise that Eskom is reported to be "struggling" to avoid a national blackout. Note the connotations of the word "struggle". It is used by local hacks to evoke sympathy for a bureaucratic, bumbling, parastatal organisation. This is an organisation that for the past 14 years has so taken its eye off the ball that it's staff members cannot be trusted to plan anything further ahead than banking their next fat pay check. One of the blissfully-naïve reasons Eskom puts forward for its inability to meet demand is that some power stations have "run out of coal" while others have wet coal. Dear heaven. Wet coal still burns. It also burns better than dry coal as any steam engine buff will tell you. Oh, Spigot forgets: You have to order coal in advance, something that is clearly beyond Eskom staff.

Refinery pie-in-the-sky

2007-10-09T01:19:00.000+02:00

ONCE the word got out that South Africa has run out of -- or soon will run out of -- oil refining capacity, it was perhaps inevitable that we should have a rush of enthusiastic amateurs willing to build new refineries (or pipelines). First, Petroline, iPayipi, and Transnet Pipelines strutted their stuff. Then there were assorted others saying they would build refineries in Richards Bay or Coega. Now we have another lot -- Venessia Petroleum -- claiming they have R10.3 billion just itching to be turned into a refinery in Zimbabwe (Huh?). The latest promise comes from Qatar, whose citizens seem to have more money than sense. But it all goes to show that if you cover the oil industry in layers of secrecy for decades (as we did) and, if you allow perceptions to become entrenched so that everyone believes that manufacturing and selling petroleum products is akin to growing and selling radishes, everyone thinks they can do it. Trouble is, the ground is now perfectly prepared for sundry optimists-cum-con-artists to lead investors and governments up the kamikazi garden path.

2007-10-09T01:18:00.000+02:00

PetroSA gets four more years -- PW Botha's revenge

2007-10-08T09:18:00.000+02:00

The continuing economic lunacy of Mossgas/PetroSA never fails to astonish. Born out of the paranoia of PW Botha, the plant outside Mossel Bay has been milking the taxpayers ever since. Now we have the trumpeted news that (hooray) five new wells, drilled at a cost of R3.2 billion will give the elephant four more years of production. The self congratulatory tone of the PetroSA press release sets Spigot's teeth on edge but it pales before the excitement evident in the public utterances of that other partner in the patch-up -- Pioneer Natural Resources, a US-based minor oil company. They boast that their deal with PetroSA links the price they can charge "their" gas supplied to PetroSA with the price of Brent crude. Isn't that cozy? Pioneer owns 45% of the operation and sells its production from the project.Production from the five wells will be 50 million cubic feet of gas equivalent per day. Nice money. "We appreciate the efforts of PetroSA in accomplishing this goal, and look forward to continuing our successful relationship." No kidding.

At last, BP Angola spews forth

2007-10-04T04:20:00.000+02:00

PRODUCTION has begun at Greater Plutonio the giant offshore Angola oil field. BP Angola is the Operator and production finally started on October 1. Greater Plutonio consists of five distinct fields discovered in 1999-2001 in water depths of up to 1,450 metres and is the first BP-operated asset in Angola. The Greater Plutonio offshore development area is located 160 kilometres northwest of Luanda and is comprised of the Galio, Cromio, Paladio, Plutonio and Cobalto fields in water depths varying from 1200 to 1450 metres. It will contain 43 wells: 20 producers, 20 water injectors, and 3 gas injectors. The development utilizes a floating, production, storage and offloading vessel (FPSO) to process produced fluids and export crude. The FPSO is connected to the wells by a large subsea system. The FPSO is 310 metres in length and has an oil storage capacity of 1.77 million barrels, oil processing of up to 240,000 barrels of oil per day, produced and treated water injection rate of 450,000 barrels per day, and gas handling of up to 400 million standard cubic feet per day. It is held in position by 12 mooring lines connected to anchor piles on the seabed. The heart of the Greater Plutonio subsea system is the longest single riser tower system of its kind in the world. At some 1,258 m, it connects the FPSO to a network of subsea flowline and control systems that include 150 km of flowlines, 9 manifolds and 110 km of instrument and control umbilicals. Many components of the subsea systems, including the riser tower, were constructed and assembled in Angola, including 6 of the subsea manifolds along with the worlds largest CALM (Catenary Anchor Leg Mooring) offloading buoy and the first ever Angolan assembled and tested subsea trees. The Greater Plutonio project involves a strong local content component. Several elements of the project were manufactured in Angola, namely the riser tower and six manifolds, including support structure, tees, flowline termination assemblies, installation and mooring piles and the CALM offloading buoy (SBM) all manufactured at the Sonamet yard in Lobito. Algoa (FMC) manufactured 45 permanent guide bases in Luanda and FMC are now assembling most of the subsea trees from "superkits" manufactured abroad. Some of the umbilicals were manufactured by Angoflex in Lobito and the water injection lines were laid by Technip using the new spoolbase in Dande, Bengo province. BP's involvement with Angola goes back to the mid 1970s. During the 1990s, BP made very substantial investments in Angola's offshore oil and it is now an important part of the company's upstream portfolio. BP has interests in four blocks with operated interests in two. Operatorship of Block 18 was transferred to BP Angola (Block 18) BV in May 1999. BP has non-operated interests in Block 15, operated by Esso (Block 15) Limited (BP 26.67 % equity) and in Block 17 operated by Total (BP 16.67 % equity). BP also has a 13.6 % interest in the Angola LNG project. Sorry to bore you all with this detail, but it does all go to show that while the Greenies were wailing about the world running out of oil, BP was quietly going about its business, developing an oilfield that could well turn out to be bigger that that of the North Sea. All goes to show that technology is the friend of man, not the enemy. Later day Luddites take note.

If Spigot was a Greenie

2007-10-04T04:14:00.000+02:00

IF Spigot was a greenie, he would find the recent announcement of the official opening of Eskom's two new open-cycle-gas turbine (OCGT) power stations, which added 1 050 MW to the Western Cape's electricity supply capacity, cause for some concern. Quite apart from the cost (some R3,5-billion of taxpayers' money) he would be concerned at the hand-clapping and general expressions of joy by the oil company that has the contract to supply fuel to these gas guzzlers. For make no mistake these turbines just love petroleum products: 1,8 billion litres a year, some say. If only BPSA shares were quoted on the JSE, hey?

Eskom's socialist dream turns sour

2007-10-04T04:06:00.000+02:00

ONE of the most obvious things about socialist enterprises is that they have their own in-built self-destruct mechanisms. Without the profit motive and the demands of shareholders to goad them into efficiency, the creatures we call parastatals ( like Eskom) over time become self sustaining bureaucracies, dedicated not so much to serving the people as to serving themselves. Take the decision to invite private enterprise into the electricity supply business. Ahem, was that not what Eskom was supposed to do? Never mind. As a result. power-generation firm Ipsa has awarded a US$14-million contract to a subsidiary of global technology giant Siemens to overhaul and upgrade four turbines that it bought earlier this year for its Coega plant, which the London-based firm reiterated would be ready for the 2010 soccer World Cup. (What a relief). Ipsa intends to bring its new capacity on stream as fast as possible to meet the desperate need for power in South Africa,” CEO Peter Earl said. Hum. You would think that Eskom managers would have done all this themselves as part of their brief. That is, planning ahead. Nope. Eskom is in business for itself. A self -perpetuating bureacracy. Private enterprise is welcome but note this: any electricity the private sector supplies has to be sold to Eskom first, before it gets to consumers. If that sounds like a good old fashioned monopoly, so be it. It's is a socialist monopoly, so that's all right then.

Told you so

2007-10-04T03:56:00.000+02:00

WELL shucks, Ipayipi didn't get its pipeline licence from Nersa ( National Energy Regulator of South Africa). Transnet got it instead. Not really a surprise to anyone who thinks and reads about such things. When the Cabinet says one thing, Nersa says "Ja, baas." Obvious really. Not to that indefatigable master of his own universe,Deyar Natha. Believing in his own ( and others') BS, and no doubt fortified by another re-read of IPayipi's submission to Nersa, Deyar is quoted this week in saying that iPayipi's is planning to "appeal" the Nersa decision. Well, Spigot's flabber has never been so ghasted. I mean, to challenge a Cabinet decision takes some balls Good luck Deyar , old bean, And good luck to all who sail with you on the BS sea.

Trevor throws a mean egg

2007-10-02T11:51:00.000+02:00

Spigot usually confines himself to matters pertaining to the oil business but this one had me cheering . Last night on the news, Trevor Manuel pulled no punches when he called for good governance in the sorry saga surrounding the proposed hefty payments to the coterie of venal money grabbers that run the PSL. He was rightly indignant that it was a member of the banking cartel that was intending to shell out 50 million big ones as “fees” What has happened to South African business ethics when a major business no longer realizes that this fee is nothing but a “you give us 10% and we will see you get the sponsorship “ bribe? Such payments are seriously, deeply corrupt. If a major bank can’t see that this is wrong, I am seriously considering moving my money under the mattress. Now the questions: Did Standard Bank not get the sponsorship because it refused to pay these “fees”? Did ABSA leak the “fees” story so that they would not have to pay? Was someone jealous because they were not included in the payola? In this storm of eggs the PSL and ABSA are both covered with sticky yellow muck an inch deep - and ordinary soccer lovers have yet another reason to stay away from the game. Viva Trevor. Down with the money-grabbing lackeys and capitalist running dogs of the PSL!

Kaboom in Island View

2007-09-19T11:33:00.000+02:00

Once again the oil companies in Durban have found that their worst enemies live right next to them. In the absence of any clear communications from the authorities supposedly in charge managing the fall-out from the huge fire at Island View near Durban, the fenceline communities have the word. And the word is not good.

Spigot quotes: “We could hear the roaring of flames from about 2km away” "People must be told what was in the tanks and whether the smoke was toxic," "I heard three consecutive explosions, they sounded like bomb blasts” "It was terrible; there were huge flames and billowing clouds of smoke. We could actually feel the heat of the flames." "I guess this was something waiting to happen”

It just goes to show once again that if you don’t take charge of the communications immediately, worthies like Spigot’s old pal Tony Carnie of the Mercury will find someone else to comment on the disaster.

Not that there were no official commentators. No. Carnie details at least five different officials commenting on the fire and all are saying something different.

Result? The only clear stories come from the fenceline commentators and god knows they are not friends of the oil business in the area. Next time fellas, organize yourselves around one cohesive storyline or suffer the same klapping.

Quo vadis Nersa?

2007-09-14T10:27:00.001+02:00

With the awarding of a pipeline license to Transnet, Nersa is fast establishing itself as a mouthpiece of the Cabinet and the DME. There is manifest confusion about who actually awards licences that Spigot can only surmise that Nersa is a puppet of the DME and the Cabinet. So what real value does it have when it simply endorses decisions already made higher up? It leaves the Act, with its laudable and lofty aims of competitiveness and free enterprise in the sector in tatters. Viva socialist centralization! Viva Nxocina! Viva National Interest! Viva!

Howzit my China

2007-09-14T10:27:00.000+02:00

Sasol in ‘hardnosed negotiations’ to build two GTL plants in China? What about the one in Qatar that still has to produce one liter of fuel? And that has gone $50 million over budget? And that has gone more than 6 months over the stipulated build period?

Hardnosed may be the way that Sasol describes its negotiations with the Chinese but Spigot guesses that Sasol’s ‘hardnosed’ is simply regular Chinese negotiation technique. Lets see if Sasol can pull off this one without getting a bruised nose like it did in Qatar.

Fischer –Troppf goes after state incentives for biofools.

2007-09-13T10:44:00.000+02:00

True to form, our Rosebank friends are again snuffling at the public purse for handouts. Not satisfied with decades of publicly-funded support (when oil was $10 a barrel) , their continued advantage on pipeline tariffs and their usurious retail margins, Sasol is now applying pressure on government for industry incentives to produce biofools. It must be assumed that they will be also using that other little leverage – a new GTL plant in the Waterberg or Free State – to convince government to open the tax coffers on soya oil. No handoutee, no fuelee, Mr. Gavameent.

Enough already from this lumpy playing field. Can’t someone get a grader and level things out?

An oil refinery at Coega?

2007-09-13T04:42:00.000+02:00

A "Black economic empowerment entrepreneurial company" (whatever that means) called Bidevco is reported to be studying the feasibility of building a possible oil refinery in the Eastern Cape at Coega. As is normal these days, consultants -- who are never previously disadvantaged South Africans -- are hard at work. Spigot does not know the chief operating officer of Bidevco but is willing to bet Jacques van Wyk is not historically disadvantaged either. The named consultants are Brazilian which means there is a chance that they may be the right colour but there is no guarrantee. There are also Japanese and Canadians involved and some South Africans The Coega Industrial Development Zone has been one of the areas earmarked for the possible location of the new 200,000barrels a day refinery, but Van Wyk states that several potential sites are under investigation, including possible synergies with existing refinery infrastructure. Really?Like who? There used to be a phrase to describe this sort of thing, Spigot recalls: "Kite flying". Entrepreneurial doesn't describe it.

Roll over Rockefeller

2007-09-12T00:14:00.000+02:00

It's not April so maybe there is something in the report from Canada that a way been found to burn water. That's right. They can now burn water. Apparently, a bloke called John Kanzius has found that as long as water is exposed to certain radio frequencies, it will burn. Radio frequencies weaken the bonds between the elements that make up salt water, releasing hydrogen. Once lit, the hydrogen burns as long as it is exposed to the frequencies. Check out the Pittsburgh Post-Gazette for more details and Youtube for a short film. What will the Greenies make of this, Spigot wonders? "The oceans will burn up!" Yup, no need to fear the death of a cause. Might be a bit tricky to blame the oil companies though.

Shell voted the “best Company to work for” ? Pull the other one.

2007-09-07T11:33:00.000+02:00

Huzzah!. Shell is the best employer to work for in the whole country!.

Some very big favours must have been called in to achieve this masterpiece in corporate spin.

After an ignominious retreat out of Cape Town to their main markets in Gauteng, Shell is now a sorry rump of what it once was.

After some initial disasters in trying to persuade staff that “going north are good”, Shell managed to shed at least 40% of its Cape Town workforce in this cunning move. Insiders believe that this was simply a good triple header stratagem to shed unneeded staff while at the same time down-sizing and relocating. And, by the way, everybody that stayed also took hefty pay-cuts because they were “re-graded”. Sounds like win, win, win, win,win for the those weasel-minded boys and girls that print “Human Resource Practitioner” on their business cards.

And then these same really very clever people found that they were unable to replace the lost talent in Johannesburg. So they hired busloads of very, very expensive expats to Johannesburg.It's called a “hardship posting”and that comes with barrel-loads of cash attached. Maybe the research only covered these expats who are laughing all the way to the bank and have every right to be thankful to Shell.

And here’s the kicker: Spigot hears that there are some very senior managers who insist on keeping their bases in Cape Town and who have simply refused to relocate. Result? Some really heavy bills from SAA and a new lifestyle known as “weekender family” life. So much for work-life balance.

With all of this going on Spigot can only conclude that the Shell HR department did a sweet-heart deal with the research house because this really does not sound like such a wonderful place to work.

And it yet again goes to show that if you want to really screw up a company big-time – hire non-productive, devious and value-sucking “HR Practitioners” (AKA the Corporate KGB).

DOWN A LION - FEEL UNSATISFIED

2007-09-07T11:05:00.000+02:00

The South African Petroleum Industry Association (Sapia) now tells us that fuel imports are likely to become a permanent feature because local refiners cannot produce at their full capacity. The reason? Well, hum, it's because the bureaucrats that insist on regulating every aspect of the fuels industry couldn't decide on the specifications they wanted for unleaded fuel. The result was refiners took the minimal capital route (clever thinking, chaps). The new specifications were promulgated six months after the industry had started providing fuel to these specifications. And six months after Sapref, for example, had opened its new Large Increase In Octane project, otherwise known as LION. So, all crude refineries in South Africa have to import high octane blend stock and export a low octane petrol blend. The lower production rate is not the only problem. There is an acute shortage of skilled manpower, especially of operations and maintenance staff -- the very people responsible for day-to-day operations. Good lord, can this be true? There must surely be a bottomless pit of historically disadvantaged people who are just dying to work in an oil refinery. And we all know that it is just the reluctance of old style managers that they are not being employed.

NOT GAS, JUST HOT AIR

2007-09-07T10:52:00.000+02:00

REMEMBER how Eskom proudly announced that they would have two new 1 050 megawatt turbines operating in the Western Cape before next winter? No need to worry, consumers, all is under control. Well, this week Eskom's pride turned into embarrassment when they had to admit that, after all, Mossel Bay and Atlantis would not get the turbines promised due to "delays in the finalisation of environmental-impact assessments". So, once more the Greenies have us all by the watsits. Now, who elected them? Spigot didn't.

MORE ON RELIANCE

2007-09-06T11:54:00.000+02:00

Reliance Industries, who have just announced their purchase of Gulf African Petroleum Corp (GAPCO) has a new refinery due to come on stream in December 2008. It will produce 7,00,000 barrels of fuels every day. Makes Sapref look puny, doesn't it?

CIRCLE THE WAGONS, CHAPS!

2007-09-06T10:57:00.000+02:00

THE INDIANS are coming to Tanzania's downstream oil industry, so stand by to face some aggressive marketing. Gulf Africa Petroleum Corporation (Gapco) has been bought by Reliance Industries . Word is they got Gapco for a song. More to the point is that Reliance Industries operates the world's third largest refinery at Jamnagar. It is also India's largest exporter of petroleum products. Listen to what a Reliance executive has to say about the deal; "The acquisition of Gapco helps us strategically as we now get access to a large chunk of the African market. Gapco is present in the three east African countries of Kenya, Tanzania and Uganda. Besides, it also has three large storage tanks, which will help us trade fuel" . ( Deyar Nather of iPayipi, take note). Gapco's three storage terminals in Tanzania, Kenya and Uganda and its 250 retail outlets are the main attraction apparently. That, and the fact that fuel prices in Tanzania are not controlled by the Government. Looks to Spigot like the cozy post-colonial dominance of the East African petroleum industry by the oil majors is due to end sooner than anyone thought. Might be a good time to flog to Reliance all those pesky service stations and stick to supplying the region from coastal installations. Let them take on the health and safety risks. Oh, but hang on to the aircraft fuel business and continue flogging motor oil -- the margins are too good. At any rate, its a good time to circle the wagons.

A slow but sure march of bureaucracy

2007-09-06T03:59:00.000+02:00

THE slow but steady encirclement of the energy industry in South Africa by politicians and bureaucrats is now obvious. There always has been a strong element of government intervention in this a market -- Eskom, Petronet (now Transnet Pipelines) Sasol, Mossgas (Petrosa) are obvious examples. But think about what has happened lately (especially regarding the liquid fuels industry); a new regulatory body The National Energy Regulator (Nersa) now issues licences( ie permissions) on every aspect of the energy sector, down to who shall, or who shall not, run service stations, operate storage depots, construct pipelines, be employed; the threat of a windfall tax, followed by an increasingly cosy relationship between Government and Sasol who are now virtually compelled to build another coal-to-liquids-plant; the sudden emergence of all kinds of people with a claim to a share in the oil industry (sundry individuals with political connections who announce, on their business cards, that they are oil traders, the "Women in Energy" who claim their gender entitles them to support from the oil companies; shadowy companies who claim loudly that they can build new oil refineries; monster government plans to cover the Eastern Cape with Jatropha plantations to make bio-diesel; alcohol distilleries owned by farmers are popping up in the Maize Belt, people with no experience scrambling for licences to build oil pipelines .... And where, in all this, are the so-called oil majors? Do they plan to build more refineries? Are they planning to extend the ones they have? Are they prepared to follow mouth with money when it comes to the new infrastructure the country desperately needs? Nope. Just deafening silence. Fancy a long-term career with Shell SA, Chevron SA, BPSA, anyone?

As we wait for the golden goose to lay...

2007-09-05T10:37:00.000+02:00

AS we wait for the golden goose to lay the egg of a National Energy Regulator (Nersa) pipeline licence for iPayipi (iPaypipi directors being more anxious than most) Spigot muses the possible outcome of there being three new petroleum product pipelines from the southern African coast to Egoli; the Petroline one from Matola and two from Durban, Transnet's and iPayipi's. Say they were all built now, would they all immediately be fully used? Certainly, one can assume Transnet's one would be, since, with its experience, it is likely to be more efficient at first, while the other two ironed out inevitable teething problems. But, after a while, each would be roughly on a par. Would this mean a price war as they jockey for custom? Would it mean a reduction in charges? Very likely, at least in the medium term. More to the point, would any reductions be passed on to the motorist? That would depend on how transparent pipeline pricing turns out to be. History is not encouraging on this point. Also, since Transnet is a quasi-State operation, it would not be in the State's interests to see its revenue dropping. Cabinet's feelings on strategic infrastructure being in private hands are well known, so Petroline and iPayipi are unlikely to find favour should they undercut Transnet's fees. Of course, the more competition there is the better, but anyone looking at putting R8 billion or so behind iPayipi might wait some time for their investment to pay back. Everything hinges therefore on continued economic growth. Place your bets, gentlemen.

Ricin for bio-fuel? Surely not.

2007-09-03T10:38:00.000+02:00

SPIGOT does not want to sound alarmist but Reuters reports that the Mocambican Government is considering using Ricin as a base for bio-fuels. No doubt these worthies are aware that the first diesel engine was designed to run on castor oil, which comes from the same plant as Ricin, but do they also know the following about ricin?

Ricin is a poison that can be made from the waste left over from processing castor beans. It can be in the form of a powder, a mist, or a pellet, or it can be dissolved in water or acid. Ricin is part of the waste “mash”produced when castor oil is made. People can breathe in ricin mist or powder and be poisoned. Ricin can also get into water or food and then be swallowed. Pellets of ricin, or ricin dissolved in a liquid, can be injected into people’s bodies. Depending on injection or inhalation, as little as 500 micrograms of ricin kills. 500 micrograms is the size of a pinhead. In 1978, Georgi Markov, a Bulgarian living in London, died when stabbed by a ricin-tipped brolly
Ricin was found in Al Qaeda caves in Afghanistan.

Spigot's law of unintended consequences applies....

Foundations of sand?

2007-09-03T10:07:00.000+02:00

SPIGOT undertands that on Friday last week, at the iPayipi Consortium public hearings into its application to the National Energy Regulator (Nersa)for a licence to build a Durban to Johannesburg pipeline , BP and Transnet put forward objections. If true, it may seem odd that BP should do so, seeing as their people (so to speak) are behind the iPaypi idea. The question is "How much are they behind iPaypi? So far, iPayipi has nothing solid in the can. No money. No expertise. No history. Zip. Their gamble is that once they get a licence they can parlay it into the considerable financial backing they need ie. R8-R12 billion -- at a rough guess. Spigot has no doubt they will get a licence, if only so Nersa can justify its bureaucratic existence. Nersa can then sit back and watch. Of course, who knows what has been "promised" by BP in conversations with iPayipi -- some of whose executives, I understand, have, in recent weeks and months, been in and out of the Waterfront head office of BP Africa, emulating the fiddler's elbow. Could it be that promises have been made of millions of litres of petroleum products flushing up to the Reef via iPaypi's still-to-be-built line? If so, Spigot would warn that such promises might vanish if the price of such transportation is not to BP's liking. Pretty sandy foundations on which to raise such mighty sums.

BUDDY, CAN YOU SPARE A LITRE?

2007-09-03T10:04:00.000+02:00

THE National Oil Company of Zimbabwe (Noczim) an organisation that owns no oil, has built no service stations, developed no oil depots, operated no road tanker fleet, run no petroleum quality laboratories, whose sole purpose is bureaucratic and which, incidentally, has possibly the worst credit record in history, is travelling Africa with begging bowl outstretched. So far the bowl is empty. Having drawn a blank in Kuwait, Iran, Libya, Sudan and Angola, the Zimbawean mendicants are now trying their luck in Equatorial Guinea, a country that matches Zimbabwe in its attempts to emulate a gangster state. Here's an idea from Spigot: Why not try Venezuela? Send Spigot's commission ASAP. Diamonds are acceptable. Zimbabwe uses 3,5 million litres of diesel, three million litres of petrol and five million litres of Jet A1 daily. It needs about US$130 million a month to import fuel. Never mind the wheel, chaps, sleds are fine.

TEST YOUR SANITY ON GLOBAL WARMING

2007-09-03T00:12:00.000+02:00

SPIGOT'S sources point out that the Heartland Institute has a quiz on Global Warming (yes, yawn if you must) that debunks the hysteria rather well. Written by a man with no connection to the institute but with a genuine scientific background, the quiz is the perfect antidote to the Chicken Lichen arguments of the Greenies. Link follows. http://www.globalwarmingheartland.org/GWQuiz/Testindex.html

Gobal yawning

2007-08-31T11:58:00.000+02:00

THE "After 8 debate" on SAFM this morning supposedly dealt with global warming. Jeremy Mags must have thought he was on to a winner. Alas, it was a damp squib. A Sasol spokesman tiptoed through the obvious minefields. A self-appointed expert from GroundWorks droned on against the usual suspects ( anyone richer than him) and -- at least while I listened -- no one challenged the basic assumption that human activity causes global warming. Oh, incontrovertible evidence of global warming, being a dire threat to the planet, was offered by an earnest young lady who claimed that Kokerboom trees were dying in the drier areas of South Africa. She did, grudgingly admit that they were thriving in not so dry parts. Since global warming believers are at the forefront of attacks on the energy industry, Spigot recommends that readers scan the Internet for antidotes to these latter-day Luddite arguments. Googling "Global warming skeptics" turns up some interesting sites which, whatever the Greenies say, does at least prove that the subject is not as cut and dried as they make out. The Heritage Foundation also has a marvellous quiz on what causes global warming. Yes, Spigot does concede that the climate may be changing. It always has. And long before anyone dreamed of filthy capitalism.

IPayipi- BP link?

2007-08-29T10:43:00.000+02:00

GIVEN the congenital secrecy with which the oil industry operates, it should not be surprised if conjecture and speculation runs riot. So it is with the iPayipi- BP link, or the speculation around it. Spigot has already noted that many of the iPayipi directors have BP connections: Clifford Elk was once a BPSA director, Dayer Natha was also once employed by BPSA. Not sure whether Yvonne Chaka Chaka has any links with BP, apart from in her hey day, suppling razzamatazz at various service station site openings for the company. There are also rumours that Riaz Jawoordien once consulted for the company. All that aside, it now appears that of the seven registered observers at Friday's public hearing into iPaypi's application for a pipeline licence, no less than four are BP SA executives. (Transnet will also be there,which should be interesting. Sussing out the opposition, perhaps?).

PETROLINE PUTS iPAYIPI in the shade

2007-08-29T10:05:00.000+02:00

PETROLINE, now armed with a National Energy Regulator (Nersa) licence to construct a petroleum product pipeline between Mozambique and Nelspruit, has snaffled Petrofac as a 25% equity partner. They have modestly not revealed what this is actually worth. Whatever. It brings Petroline closer to being the builder of the first privately-owned pipeline to be built in South Africa since the 1960s. Meanwhile, Friday brings iPayipi to the fore with public hearings into their licence application to Nersa. Given the speed with which Petroline got both a licence and a new partner, it would seem that it has an inside track. Could Sasol be their backers, Spigot wonders? Ipayipi supporters, whoever they are, don't seem to have quite the same clout. By contrast, Petroline are so confident that they have announced they will dredge the Maputo harbour to a depth of 14 m, which will allow 85 000 t vessels to enter. Not quite a VLCC's requirements.

HOPE SPRINGS ETERNAL

2007-08-29T10:00:00.000+02:00

CONFIDENCE positively oozed from Mocambique's Minister of Mineral Resources when she announced this week that a US$68-million oil exploration research tender would be issued before the end of September. According to Engineering News (still the only newspaper worth reading on energy matters) the contract would cover either the southern Inhambane province or the Rovuma Basin. The Minister wants results "by December" -- which should scare off any chancers, Spigot supposes. The Minister rather breathlessly told Reuters," If we find oil today, we need to start production and we can only talk of consumption in 2014, and depending on the quantity, we will also export it." Right. Think positive. The Minister added, "We are receiving a lot of interest from multinational companies, but given the size of the country, which is very big, we will decide on the company that can give us results by December, which will be either from South Africa, Brazil or the United States of America." And who are these multinationals? Why those well-known oil giants, Canada's Artumas Group Inc, the U.S.-based oil firm Anadarko Petroleum Corp, Petronas of Malaysia and Italy's ENI. Note, none of the former seven sisters. Oh, well. Here's hoping, anyway.

More pipeline rumour

2007-08-29T07:12:00.000+02:00

ONE of Spigot's readers claims to have heard from a " base-level source" (whatever that means) inside Transnet that it has withdrawn its application for an EPC (another damned acronym) licence. He says this raises the possibility of either a new bidder or leaving iPayipi as the sole bidder. Well, Spigot did say that secrecy breeds speculation. Anyone out there able to clarify this increasingly Byzantine matter of the new Durban- to-Reef petroleum product pipeline? The murk thickens. As does the plot.

iPAYIPI public hearing -- book now!

2007-08-27T11:41:00.000+02:00

SPIGOT has got to hand it to iPayipi, the wonderfully-named consortium still persisting in its attempts to build a pipeline from Durban to the Reef in the teeth of what looks very like Cabinet opposition. Readers will recall how the Cabinet sneaked in approval for Transnet Pipelines' proposal before the public participation processes regarding iPayipi's scheme had been completed. To lesser mortals that might have seemed like the end of the iPayipi dream but messers Nather, Jawoordien and Co are obviously made of sterner stuff. At the end of this week public hearings are going ahead. It appears that the consortium is asking for a licence to build not one, but three pipelines: a 26-inch, 590-km long pipeline from Durban to Leandra; a 22-inch, 100-km long pipeline from Leandra to Alrode; and a 20-inch, 130-km long pipeline from Leandra to Waltloo. Pretty brave stuff, considering they don't yet have the money (among other things). Whatever, let's hope our brave newshounds roll up on Friday, 31 August, at Kulawula House, 526 Vermeulen Street, Arcadia, Pretoria at 9am to report. To make it easy for them, Spigot suggests they telephone Herbert Chiloane at 012 – 401 4656 to get a seat. Alas, Spigot cannot be there, since it would be interesting to see how many oil industry executives turn up. Rumour has it that they are actually behind the iPayipi application.

Common sense on the oil industry

2007-08-27T04:31:00.000+02:00

"
For those who are quick to blame free markets and capitalism whenever oil prices take another jump up just take note of this fact, 80 percent of the world’s oil industry is made up of nationalized companies. That’s right, the vast majority of the world’s oil industry is a creature of socialism.
"
Spigot is obliged to a fellow blogger for this bit of common sense wisdom.

Local "oil giants" are mainly pigmies

2007-08-24T09:34:00.000+02:00

EVERY time Spigot sees local subsidiaries of international oil companies described in the media as "Giants" ( Oil giant Shell this week ....Oil giant BP .. etc) he despairs at the blind ignorance and lazyness of local scribes. The fact is that the only fuel company operating in South Africa that deserves this cliche is Sasol. The rest are simply local subsidiaries of their, admittedly large, parent companies. Does this sloppiness matter? Well, yes it does, because by persisting in describing Shell SA, BPSA, Total SA and the rest as "Giants," journalists are perpetuating a myth. The local subsidiaries of international oil companies are just that -- subsidiaries. In most cases they are limited liability companies which, as the word "limited" implies, sink or swim on their own. Shell Zimbabwe Limited can hardly be described as a giant. The same applies to local oil companies like Shell and BP. The trouble is -- and it is worse outside South Africa in sub Saharan Africa -- the giant myth poisons perceptions of oil company staff, the public and the governments who continue to think that all oil companies, regardless of the local realities, have more money than God. One obvious result is the self-defeating wage demands of unionised workers of these companies which can only result in loss of jobs through outsourcing and mechanisation.

Bouquets and brickbats for BP

2007-08-24T09:02:00.000+02:00

THOSE brave souls at BP have reportedly invested some R20-million to launch a new portable payment terminal at 450 of its petrol stations. Called "Swipa" (not eSwipa?) the terminals, accept any debit cards, and -- because this is South Africa -- drivers don't even have to get out of their cars to pay. No doubt the system has been introduced to reduce the risk of cash-in-transit robberies that are fast becoming a national sport. Not a great reduction, it must be said, since the convenience stores attached to service stations often make more money than the pumps, but even so, every little helps. Spigot does wonder why there has been a howl of protest from the Fuel Retailers' Association. Didn't BP first check with them how it would go down? Allegations are that the BP Swipa system is illegal in terms of the Department of Minerals and Energy (DME) regulations . Didn't they talk to the DME before the launch? Not that Spigot is complaining. BP deserves a big bouquet for Swipa. It is just a pity that only salesmen seem to have been in on the deal. Isn't this precisely why there are corporate affairs departments?

Greenies form new pressure group

2007-08-23T11:19:00.000+02:00

HAVING SCREAMED for years about the dangers of green house gases (mainly water vapour) specifically carbon dioxide, the Greenies have been hoist with their own petard by the uncomfortable (for them) fact that only nuclear energy has a hope in hell of producing power without having a " carbon footprint" the size of a Yeti's size fourteen clodhoppers. No matter. A local bunch have now formed an anti-nuclear group comprising 14 non-governmental organisation and community groups ( plus several individuals). Wittily calling themselves CANE ( Coalition against nuclear energy) these enthusiasts plan to oppose the expansion of the local nuclear energy industry. No doubt they are busily insinuating themselves into the good books of the local media , adding to the dial-a-quote sources so beloved of lazy scribes. Spigot wonders if anyone else has noticed that these people, while claiming to be "progressive and left wing" if not revolutionary, are actually the most conservative of reactionaries. After all, they do not want change. Far from it, they want everything to stay the same and preferably march backwards. Backwards for everyone else, that is. They will still be able to fly everywhere to conferences. They will be able to stay in leafy suburbs with all mod cons. The rest of us, according to them, will have to change our lifestyles. All aspirations to a better standard of living are condemned by these latter-day Puritans.

Sasol expands its gas lines

2007-08-23T09:55:00.000+02:00

ANY chance that Sasol might, in the national interest, relax its stranglehold on the former petroleum products line between Durban and the Reef and allow it to revert to its original purpose, appear slimmer than ever. Grown fat over the years on its original huge injection of taxpayers' money, the Sasol juggernaut has announced expansions to its gas line in the industrial suburb of Clairwood in Durban, having snaffled another client in the area. It also has plans to extend its piped gas supply infrastructure on the Reef. It has to apply to the National Energy Regulator (Nersa) for permissions, of course, never mind that the local Durban municipality is the only real interested party. Layers of bureaucracy are the curse of the modern age. Spigot almost feels sorry for Sasol. It's a fleeting feeling. It's gone now.

Nersa -v- Cabinet, round 2?

2007-08-23T09:27:00.000+02:00

THE National Energy Regulator (Nersa) seems set on another collision course with Government -- this time over electricity prices. Having only just covered up the cracks that opened during the iPayipi affair, when Cabinet bluntly overrode Nersa's encouragement of a private pipeline proposal in favour of Transnet's, Nersa has now been rapped over the knuckles by Minister Alec Erwin over its insistence that it alone has the right to determine Eskom's electricity prices. Eskom wants to bump up prices to cover the costs of the massive new power generation the country desperately needs. Erwin says Eskom is right, regardless of what Nersa may determine as a fair increase. All goes to show that economics trumps pseudo-Marxist reasoning, every time. Not bad Alec, you old communist! Still a member of the party, are you?

New pipeline insights

2007-08-23T05:46:00.001+02:00

Now here is something Spigot did not think of. Courtesy of a reader: " Who do you think really backs the Petroline consortium? Don't be suprised if it is Sasol. Let the Maputo line be built and it is a natural outlet for Sasol's excess production from any new plant. The fact that they export fuel north when the inland market is short beggars belief! Gautengers will continue to pay too much for their fuel based on the current pricing mechanism. If I was (Premier) Shilowa I would be hopping bloody mad."

The other Y2K - Climate Change

2007-08-21T11:24:00.000+02:00

FUTURE HISTORIANS will recall with amusement the millenarian panic of Y2K (year 2000). Remember, all the computer Geeks of the early computer revolution came out of retirement crying, "Woe! Woe! The world will come to an end at the stroke of midnight on December 2000." The idea was that all computers not adequately reprogrammed would crash, airplanes would fall out of the sky, bank balances would disappear into the void etc etc. Unless (and here the boondoggle) businesses immediately hired all the aforementioned Geeks. Only they had the knowledge to fix things. And so it came to pass that nothing whatever happened. Geeks got richer, of course, but that was about it. Now, the new boondoggle is Climate Change. Again the cries of "Woe!" are echoing in the rafters. Again, thousands have climbed on the bandwagon. Latest passengers are non other than Business Unity South Africa (BUSA). (If ever there was an oxymoron, this is it). BUSA has issued a circular calling desperately to its members for interest in the Government's National Committee on Climate Change (NCCC). Apparently, the terms of reference for the NCCC are under review and BUSA needs to comment. "It should be noted that BUSA is entitled to five representatives of which only one seems to be attending", the BUSA circular wails. What an opportunity! Visit the UN in New York -- all expenses paid! Come on chaps, why the lack of interest? Don't you know that humans are warming the planet by their selfish attempts to improve their lot? Don't you want to sit on the side of the angels? Come on now! What's this got to do with the oil industry? Well, who are the main targeted bad guys in all this human-induced climate change? Why, the oil industry, of course!

Musings on Sasol and Transnet pipelines

2007-08-21T02:55:00.000+02:00

ONE of Spigot's readers has made the assertion that if Transnet Pipelines ( formerly Petronet) had not made a deal to reverse the flow of one of their Durban-to-Johannesburg pipelines so that instead of carrying finished products ( diesel, jetfuel and petrol) from Durban to the Reef, it now carries only gas from Sasol to various industries in Natal, then we wouldn't be in the shtuck we are in now, ie unable next year to supply our main industrial area without huge effort using road tankers. Of course, nothing here is exactly "news". But it does raise some interesting " what ifs". For example, what if the new Transnet pipeline runs into difficulties and cannot come on stream in time for the World Cup? What if there are not enough road tankers and road tanker drivers to take up the slack? What if the Railways cannot get their act together fast enough to supply an alternative (and safer) method of transport? And here's the real question; Will Sasol then, in the national interest, release its stranglehold and allow the existing gas line to revert once more to its original purpose of transporting fuels? Will Sasol gas customers in Durban scream blue murder? Just wondering. I mean, Sasol has lotsamoney and it is always claiming to be a national asset. How about it acting like one.

Sasol threatens the Waterberg

2007-08-20T09:56:00.000+02:00

SO, Sasol is going to build a new coal to liquids fuel plant, either in the Waterberg or in the Free State somewhere. Stand by for the usual screech of horror from the Greenies. The new plant will produce some 80 000 barrels a day, upping Sasol's contribution to national liquid fuels energy needs from around 40% to what? 60%? I only ask because that might make it difficult, in the short run, to find a market for Sapref's entire production. It is also not good news for the other oil company's inland fuel retailers in Gauteng, especially if Sasol service stations continue to spring up. Surpluses in Sapref production will probably go up the East African coast somewhere. If it does, watch out for the usual "they are exporting our fuel!" headlines written by ignorant journalists. But wouldn't it be nice if it all meant cheaper fuel in South Africa? Perhaps, even a price war on petrol? That would be something to see. Spigot is not holding his breath, though. Sasol probably predicates its expansion on the existing, tightly-controlled pump price system. The ANC Government certainly doesn't want to change the slickest-ever tax-gathering system. Oh, how quickly the pigs turn into farmers, as George Orwell would have said.

Biofuels switch a mistake, say researchers

2007-08-20T09:55:00.000+02:00

SPIGOT is not a natural Guardian reader, but is indebted to that esteemed British newspaper for the following. Shock, horror! Increasing production of bio-fuels to combat climate change will release between two and nine times more carbon gases over the next 30 years than fossil fuels. Researchers at the University of Leeds have calculated the impact of bio-fuel carbon emissions across the whole cycle of planting, extraction and conversion into fuel. Bio-fuels look good in climate change terms from a Western perspective but globally they actually lead to higher carbon emissions, they conclude. "Brazil, Paraguay, Indonesia among others (Mocambique, South Africa) have huge deforestation programmes to supply the world bio-fuel market", he said. Does the Law of Unintended Consequence loom over the horizon? Spigot wonders.

Pipleline poser (2)

2007-08-20T00:51:00.000+02:00

FOR those who do not read the comments from readers, this recent contribution to the pipeline saga is very interesting. " 1. Dear Trevor (Manuel) promises Sasol there will be no windfall tax. In fact Government 'encourages' Sasol's investment in new plant inland. (From tax to subsidy via one short commission)2. A few days later ...the Department and Minerals and Energy (Gumede) says that iPayipi played and lost - bad luck....3. This means that Petronet are preferred and of course you understand how tight Sasol and Petronet are. Just check the deal they have with the gas line inland to Durban. Again blocking use for inland movement from the coast.4. Coastal refiners will be held hostage as to how much fuel they can move inland - Sasol's product gets put to bed and Petronet control the line for their mates in Secunda.5. Who do you think really backs the Petroline consortium? Don't be suprised if it is Sasol. Let the Maputo line be built and it is a natural outlet for Sasol's excess production from any new plant. The fact that they currently export fuel north when the inland market is short beggars belief!6. So the merger (Sasol/Engen) was kicked out. Sasol don't lie down that easily. And Gautengers will continue to pay too much for their fuel based on the current pricing mechanism. If I was (Premier) Shilowa I would be hopping bloody mad. " Any comments from Sasol?

Reading between the lines

2007-08-17T10:59:00.000+02:00

ONE of those typically-boring press releases,extolling the virtues of a new plant, hit the media this week and, as usual, what was unsaid was much more interesting than what was. It was all about BP's "integrated safety, security and environment policies" and how they affect the company's warehousing and transport infrastructure (yawn). Quoted voluminously was Allister Kay, described as "LSC Africa logistics manager" (what, precisely LSC stands for, we were left to guess -- such is the oil industry's love of mysterious acronyms). Spigot wonders if BP controls the public utterings of its staff these days. Reading between the lines it emerged that Unitrans has been "identified" in presumably the words of Mr Kay, as a " single countrywide service provider with a mindset, outlook and culture similar to our own." Dear heaven, does he really speak like this to his mates? Spigot wonders if the trade union that recently took out BP drivers on strike will have noticed what this means for the long-term prospects (as permanent BP staffers) of its members.

Some pipeline posers

2007-08-17T10:17:00.000+02:00

NOW here's a thing: The Petroline consortium, which plans to build a pipeline from Matola in Mocambique to Nelspruit in South Africa, applies for "permission" from the National Energy Regulator (Nersa) and gets it -- despite the Department of Minerals and Energy objecting. So, Petroline goes ahead, confident that it will begin building by the middle of next year (2008). Meanwhile, the iPayipi Consortium applies for a licence from Nersa to build a (different) pipeline from Durban to the Reef, confident that it, too, will get a licence. Then the Cabinet steps in and says Transnet Pipelines can build a new line from Durban to the Reef (ignoring Nersa's role in the process) and the DME says, in effect, "tough luck to iPayipi". But, hang on, what if iPayipi does get a licence from Nersa? Will the Cabinet step in to stop it, as the initial DME reaction seemed to infer? Will an iPayipi pipeline be viable if there is already an expanded Transnet pipeline in place between Durban and the Reef? And what about this for a thought: Could it be that the Petroline project, being backed by black women (Women in Oil and Energy South Africa), has an inside track? Could the fact that iPayipi, despite its name, has a predominantly male South African Indian and South African white complexion, have scuppered its chances? Surely not. And, what if the Mocambican Government approves Petroline's plans and the South African Cabinet does not?

Isn't free speech wonderful

2007-08-17T06:15:00.000+02:00

Spigot's musings on the LPG industry is eliciting some interesting responses. Here are some more: What is the margin on a kilogramme of gas? Spigot knows the refinery gate price is controlled. After that it is every man for himself, some even saying that the profit on a kilogramme is higher in South Africa than anywhere else.Others have alleged a cartel or some sort of monopoly is operating. Surely not? Mind you, Spigot finds an awful lot of sameness about the price, wherever you buy the stuff. No matter. But what is curious that in the bad old days refineries used to blow the stuff out the chimneys as a bit of a nuisance. They called in flaring -- a practice frowned upon these days, thanks to the Greenie obsession with carbon dioxide. Come to think of it, bottled gas only made an appearance on the South African market in the 1970s. It was then a rich man's thing, for looking cool on a camping trip. Now of course it is a different matter. The poor are being encouraged to use it instead of coal or wood. Leading the urging is Escom. Could LPG pricing be something Nersa (the National Energy Regulator should look into. Better that than messing about with pipelines.

LPG all bottled up?

2007-08-16T11:28:00.000+02:00

IT seems that the barriers to entry in the LPG bottled gas market are so high that smaller, new entrants have a tough row to hoe. One well-informed reader has commented thus:"...why on earth would an investor approve companies that they own shares in to buy items worth zero value to them only to hide them and not receive a return on such items? The problem with the "smaller new entry gas companies" is that they enter the market with a few thousand cylinders and expect to cover the entire market with them and get them back immediately. Little do they realise that they would need to invest in 100 000's of cylinders in order to sufficiently supply a small market let alone a large one like Gauteng, Natal or any major province in which they operate. All of the gas companies operate in the neighbouring states, so there would be no reason to pay tax at the border to move these cylinders....who is going to pay for these cylinders to be transported so far...the trucks cost a fortune...why waste time doing that...if these smaller companies want to compete on equal footing they need to invest...."He makes some good points. Any smaller new entry gas company have any different views?

Enrichment fables

2007-08-16T03:12:00.000+02:00

The Department of Minerals and Energy this week released a White Paper on nuclear energy development in South Africa where much is made of the potential for home-grown nuclear enrichment , thousands of jobs and a golden future for the development of more power plants. For those of you that may have missed the little spat between Iran and the rest of the world about nuclear enrichment, it goes something like this: Iran wants the bomb so that it can smite all unbelievers in its neighbourhood, so it starts enriching uranium. The mullahs, of course are using the same argument as the DME – they need energy for their people, not for bombs. The rest of the world is not that dumb. Knowing that the mullahs are not the most rational or stable of folks to have in your back yard, the rest of the world are determined to put a stop to this. And so there has been ever-increasing pressure on the mullahs to step back from the edge, leading to hard games of brinkmanship, rhetoric and political and financial ball-squeezing. For those that know what happened to North Korea, Iran is not going to be a pretty sight in another year or so. The signs are already visible on its streets and markets. Back to Sandile Noxina and Tseliso Maqnbela, these deep thinking doyens of the Dept. of Minerals and Energy. Of course there is nothing wrong with nuclear energy, but do the esteemed Directors-General have any idea of the shit-storm that is about to hit them when they try to enrich the uranium that will (under state control, we hope) provide 10 000 sustainable jobs? Do these gentlemen really think that the rest of the world will stand by and watch fissile material being produced on the leakiest and most corrupt continent in the world? Watch this space for some serious diplomatic fireworks over the next few weeks and months.

Consider the humble gas bottle (2)

2007-08-15T11:20:00.000+02:00

SEEMS like Spigot struck a nerve here. LPG suppliers are not being so friendly to each other, right now. Apparently, the game is to buy competitor-bottled LPG cylinders and then send them out of the country, to Botswana. It reminds Spigot of a rumour in the industry years ago that, somewhere on a farm in Namibia ,there is a mountain of LPG bottles. Spigot used to believe that if it existed it was probably because a farmer in that vast land had figured that the cost of returning the bottles was too high to bother with. Now, he is not so sure. If this practice of attempting to destroy small operators is being done by the big LPG suppliers, then this is surely something the Competitions Board should look into?

DME, NERSA or THE CABINET: WHO'S SKINNING THE PIPELINE CAT?

2007-08-15T10:44:00.000+02:00

THE egg dancing around the sensible Cabinet decision to give Petronet (Transnet Pipelines) the go ahead to build a larger petroleum product pipeline from Durban, is something to see. But first thing to notice is that the price of the proposed line has now jumped from R9.5 billion to R11.5 billion -- if ever there was a signal to pull finger, this is it. Meanwhile, no doubt anxious to mend fences with the National Energy Regulator, the Director General of the Department of Minerals and Energy, DG Sandile Nogxina, has gone on record saying that the Transnet Pipeline did not exempt the company from following normal regulatory procedure, nor did it preclude the prospect of competing private-sector pipeline projects, Presumably, that means the iPayipi Pipeline can continue to go ahead. ( If they do so, they must have more money than sense).: “In no way does Cabinet’s decision exempt Petronet from following procedures as stipulated in the Act,” and that the State would welcome competition in the sector, Nogxina said. Cabinet took a policy decision in the “interest of security of supply”, he stated. Ja, well. That is clear as mud. The public hearing on the iPayipi proposal will now go ahead ( if they are crazy) the Nersa bureaucrats can feel self-important again, and everything in the garden will be lovely.

Famous last words?

2007-08-13T10:55:00.000+02:00

Grain South Africa says bio-fuel will not compromise food security."Obviously there is a concern currently on the price of food, we have a shortage this year, but that is primarily because of the very serious drought situation. This is typical of a one-in-15 years type of drought and we must not let it concern us too much," said John Purchase of Grain SA. But, with the ethanol plant in Bothaville at a standstill..?

Once upon a time

2007-08-13T10:32:00.000+02:00

ONCE upon a time, after World War ll, in fact, with the world economy booming, the oil companies were exceedingly short of skills. So, being practical, they simply hired the ex soldiers who had gained valuable experience supplying the Allies. Brigadiers became managers; sergeants were put in charge of oil depots; quartermaster clerks manned the back offices. It all worked swimmingly well, for years in fact. You see, getting petroleum from A to B, safely, on time, is a bit of a military operation. Sixty years on, everyone seems to think it is as easy as selling beans or rice ( as Spigot never tires of saying). Common sense tells us that petrol is dangerous stuff. A little bit more knowledge tells that not all petrol is the same. Some is "on spec" as they say. Some is not. Use poor quality stuff and beware your engine's fuel system. The same applies to LPG ( liquid petroleum gas). To put it bluntly it is highly dangerous stuff. Handled badly and the resultant explosion ( known as a blevy) makes TNT look tame. We should all be very, very concerned about safety in the LPG industry.

Jatropha bandwagon, rolls on

2007-08-13T10:25:00.000+02:00

A Ukrainian company is reported to have bought Mozambican firm Inveragro and 11,000 hectares of land in a deal worth US$ 1 million to plant jatropha, the wonder plant that grows like hell and produces beans that contain a substitute diesel oil. Situated on a former cotton plantation, the plan is to employ 480 people. First harvest is expected in December (my, that is quick), with oil extraction scheduled to begin at the end of 2008. How curious that cotton did not work too well. Maybe the magic bean will.

And now, a new refinery in Mocambique -- perhaps

2007-08-13T10:24:00.000+02:00

Thanks to the general perception that getting into the sub Saharan oil industry is a "licence to print money" (as they used to say of the television industry) it seems that not a day goes by without someone announcing a new mega project. First it was pipelines, now it is refineries. This time, Mocambique has "approved" the construction of a US $ 1.3 million refinery in Nampula. Who will build it, where the money will come from (let alone the people to run it) is not yet known. Why so shy chaps, Spigot wonders? Does anyone recall that Mossgas had to import welders from South Korea? Anyway, this time the target is Malawi, Zambia and Zimbabwe (Huh?)

DME 1; iPayipi 0

2007-08-13T10:23:00.000+02:00

WELL, WELL, WELL Spigot was right. Could it be that someone in the Department of Minerals and Energy (DME) was listening? Probably not. But, at least, common sense has prevailed. That is how Spigot sees the decision by the Cabinet to override the increasingly self-important National Energy Regulator by giving Petronet the go-ahead for the desperately-needed petroleum products pipeline from Durban to the Reef. Let's hope the hilariously-named iPayipi Consortium has the sense to retire from a field best left ( on this occasion) to the State, rather than to a bunch of amateurs with no experience and little to commend them, apart from their having an eye for the main chance. Readers of Spigot will recall him saying that the quickest, simplest solution to the acute petroleum logistics bottleneck facing the Reef, would be for Petronet to bolt on a new bigger pipeline. It will avoid costly legal wrangles around servitudes, for one thing -- a factor that iPayipi's licence application to Nersa spent a great deal of words avoiding. Spigot has to mention that had Sasol not done a deal with Petronet a decade or so ago, to use one of the petroleum pipelines to send gas down to Natal, subverting its original purpose of pushing petroleum products up to the Reef, we would not be in the bind we are in now. So, as Nhlanhla Gumede, deputy director general of the DME, so aptly put it when asked how this would affect iPayipi:"It didn't work. Tough luck." Shame really, but then, at least all those family trusts proposed by the directors of the consortium, have not yet been registered.

Consider the humble gas bottle

2007-08-13T03:01:00.000+02:00

HAS anyone noticed how friendly LPG suppliers are to each other?You hand in an Afrox bottle and you get your pick of other branded bottles -- Easigas, BP Gas, and so on. Sensible system really. Gas bottles circulate merrily and everyone is happy that the gas is sold. It's a bit like buying Coke in a Pepsi bottle. It all works remarkable well, considering that one gas supplier (Afrox) has about three quarters of the LPG market in South Africa at the moment. It works well as long as everyone plays fair. But, there have been times when a neat little game is played by gas suppliers -- they buy competitor-bottled LPG and then hang onto the cylinders. Only the big players can do this of course, but it is usually enough to drive the smaller companies out of business. It's a bit like Coke discounting in targeted areas to stop small mineral water suppliers taking a slice of the market. That wouldn't be happening now, would it? To LP gas, I mean.