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Transcript of Nuclear Africa 2014 Rob Adam NIASA. Contents Global situation Local situation Perspectives of...
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Nuclear Africa 2014
Rob AdamNIASA
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Contents
• Global situation
• Local situation
• Perspectives of industry
• 2014.
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Global situation
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Political fallout
Source: WNA (2013)Source: WNA (2013)
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Expensive upgrades
Source: WNA (2013)Source: WNA (2013)
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Financial challenges
Source: WNA (2013)Source: WNA (2013)
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Positive developments
Source: WNA (2013)Source: WNA (2013)
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Nuclear drivers
Source: WNA (2013)Source: WNA (2013)
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New build map
Source: WNA (2013)Source: WNA (2013)
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Future plans
Source: WNA (2013)Source: WNA (2013)
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Local situation
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•• President now chairs (NEC)2
• New Minister of Energy
• BRICS dynamic
• Mozambican offshore gas
• Karoo shale gas
What has changed over the past 2 years?
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BRICS dynamics
•• SA is an enthusiastic new member
• All other BRICS countries have nuclear (and space!) programmes.
• Shifts in relations with Western countries as a result of African geopolitics.
• SA – Russia trade levels currently low
• China has several nuclear offerings
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Recoverable East African gas reserves
Source: D. Ledesma, “East Africa Gas – Potential for Export”, 2013.Source: D. Ledesma, “East Africa Gas – Potential for Export”, 2013.
Trillion cubic feetTrillion cubic feet
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Is East African gas a baseload option?
No problem really. Much longer pipelines reliably deliver gas to much larger markets.
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• In 2009 Sasol was a major player but has been overtaken by Anadarko (USA) and ENI (Italy).
• Cost of development of LNG train is $US 12 – 20 bn.
Australian offshore platform will cost $US 50 – 60 bn.• Mozambique GDP = $US14 bn, Tanzania GDP = $US 28 bn. Pressure will therefore be put on these governments to trade equity for operational contributions.
• The conclusion is that these resources will not be controlled by Africa.
Who will own the value chain?
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Energy security? Conflict returns to Mozambique after 21 years
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Initial shale gas success in the US was driven by 9 enablers
•• Good understanding of a large high quality resource base.
• Ease of land accumulation.
• Water availability and lenient environmental regulations.
• Clear policy and fiscal regime.
• Availability of capital.
• Technology evolution and aggressive risk appetite.
• Sustained periods of high gas prices.
• Some available pipeline infrastructure.
• Developed oilfield service support network.
Source: McKinsey (2013)Source: McKinsey (2013)
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Shale gas development typically follows five phases.
Source: McKinsey (2013)Source: McKinsey (2013)
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2020
But it takes 1000 – 1500 wells for a basin to be proven.
South African has significant resources
Source: McKinsey (2013)Source: McKinsey (2013)
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2121Source: McKinsey (2013)Source: McKinsey (2013)
Cost of extraction ($US6 per MMBtu is the ceiling)
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Fracked landscape in Wyoming
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Perspectives of industry
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Hindsight and foresight• SA Industry has spent several hundred million rand since
2007 preparing for the new nuclear build.
• It’s been a little like training for the Olympics when the date is unknown. There is a danger, on the one hand, of peaking too soon, and losing key people as the process is delayed. There is a danger, on the other hand, of being unprepared.
• Preparation is not just technical, it is financial too.
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There are implications for how industry prepares itself.
2525
BOO, EPCM, EPC…??
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Will procurement go in two phases and choose the tech partner first and then
allocate localization?
Different strategies are appropriate depending on the answer to this question.
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Guarantees and bonds
• In order to bid for new build contracts, companies will need to put financial guarantees in place:
– Parent company guarantees are typically 30% of the project value– Performance bonds are typically 10%
• On a R150 billion project, with 40% localization, this amounts to R24 billion.
• The market capitalization of the entire South African construction industry is less than R50 billion.
• Government will set a high bar for localization. Will it incentivize by instructing Eskom to reduce the bond requirements for local components of bids?
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2014
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2014• There is a new urgency in government regarding the
nuclear procurement process.
• It will be managed this time to maximize localization. This is different from the 2007 emphasis. Many of us here in this room can congratulate ourselves on a successful campaign in this regard!
• We are much more prepared than we were 7 years ago. The Eastern Cape province sees this as a massive opportunity.
• Emphasis must also be placed on the human resource pipeline
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HR requirements to build 9600MW
• At the height of the 9600 MW construction programme we will need:
– 1620 engineers– 1770 technicians– 180 scientists– 220 project managers– 30 planners– 200 instructors– 440 security staff– 22650 artisans– 750 other skilled staff
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Thank You