Download Dr Rob Adam - Nuclear Africa

Nuclear Africa 2014
Rob Adam
NIASA
Contents
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Global situation
Local situation
Perspectives of industry
2014.
Global situation
Political fallout
Source: WNA (2013)
Expensive upgrades
Source: WNA (2013)
Financial challenges
Source: WNA (2013)
Positive developments
Source: WNA (2013)
Nuclear drivers
Source: WNA (2013)
New build map
Source: WNA (2013)
Future plans
Source: WNA (2013)
Local situation
What has changed over the past 2
years?
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President now chairs (NEC)2
New Minister of Energy
BRICS dynamic
Mozambican offshore gas
Karoo shale gas
BRICS dynamics
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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
Recoverable East African gas reserves
Trillion cubic feet
Source: D. Ledesma, “East Africa Gas – Potential for Export”, 2013.
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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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Who will own the value chain?
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In 2009 Sasol was a major player but has been
overtaken by Anadarko (USA) and ENI (Italy).
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Cost of development of LNG train is $US 12 – 20 bn.
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Australian offshore platform will cost $US 50 – 60 bn.
Mozambique GDP = $US14 bn, Tanzania GDP = $US 28
bn. Pressure will therefore be put on these
governments to trade equity for operational
contributions.
The conclusion is that these resources will not be
controlled by Africa.
Energy security? Conflict returns to
Mozambique after 21 years
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Initial shale gas success in the US was
driven by 9 enablers
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Good understanding of a large high quality resource
base.
Ease of land accumulation.
Water availability and lenient environmental regulations.
Clear policy and fiscal regime.
Availability of capital.
Technology evolution and aggressive risk appetite.
Sustained periods of high gas prices.
Some available pipeline infrastructure.
Developed oilfield service support network.
Source: McKinsey (2013)
Shale gas development typically
follows five phases.
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Source: McKinsey (2013)
South African has significant resources
But it takes 1000 – 1500
wells for a basin to be
proven.
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Source: McKinsey (2013)
Cost of extraction
($US6 per MMBtu is the ceiling)
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Source: McKinsey (2013)
Fracked landscape in Wyoming
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Perspectives of industry
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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BOO, EPCM, EPC…??
There are implications for how industry prepares itself.
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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:
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1620 engineers
1770 technicians
180 scientists
220 project managers
30 planners
200 instructors
440 security staff
22650 artisans
750 other skilled staff
Thank You