Kudu Gas ProjectFossil Fuel Foundation ColloquiumNatural Gas – Southern AfricaJohannesburg 20 September 2006

Presentation structure

Phase1 Gas to Power Project

Phase 2 studies

2007 Drilling campaign

Kudu history – key milestones

– Discovered 1974 by Chevron/Regent/Soekor– Two wells drilled by Swakor 1987-88– Licence awarded 1993 – Shell (75%), Energy Africa (25%) – Energy Africa farm-out 15% to Texaco– Petroleum field declared 1997– Drilled four wells – Shell relinquished 2002 - ChevronTexaco (60% + operatorship), Energy Africa

(40%)– ChevronTexaco relinquished Nov 2003 – Energy Africa 100%– Dec 2003 - Energy Africa 90%, Namcor 10% – Tullow Oil acquires Energy Africa May 2004

What we set out to do……

– Retain our participation interest in the licence

– Transferred 10% to National Petroleum Corporation of Namibia (Namcor)

– Focussed development on proven GIIP only : de-linked Phase 1 from Phase 2 upside development opportunities

– Take advantage of current window of opportunity in power market

– Established “open book” co-operative approach with downstream parties to “fast-track” time to development

Kudu Field

Greater Kudu Area (Tscf)Tullow(2003) GCA

– Proved 1.38 1.45 – Probable 3.82 2.72– Possible 9.98 7.12

Phase 1 Gas to Power– Kudu Main Field area

– Required GIIP 1.3 Tscf– 22 year contract life

Further appraisal required to determine upside

Kudu Main Field

Kudu Upstream JV

Energy Africa Kudu Limited (90%)

Namcor (10%)

+ PartnersKudu Power Station Company

Nampower (100%)

+ Partners (?)

Gas SalesAgreement

Nampower

Power Purchase Agreement

Domestic sales in Namibia

Power Purchase Agreement

Eskom - export sales to RSA

KUDU - 800MW gas to power project

Kudu Field Location

Logistically remote area

– 170 km to Oranjemund– 800 km to Windhoek– 800km to Cape Town

Located within active diamond mining area

Upstream project status

FEED study completed November 2005– Outline Development comprises:

– 3 +1 production wells (4th well in Year 10)– Subsea development with umbilical control– Onshore processing terminal – Compression in year 13– ITT’s prepared and ready to issue

Production License– Approved 31st August 2005

Regulatory & Other Approvals– EIA and EMP approved– Namdeb agreement on pipeline route, site location, access

and security, township, etc

Onshore/Offshore Survey– Onshore and nearshore surveys complete – no critical

impacts identified– Offshore survey pending – conclusion of GSA HOT

Downstream project status

Technical– Power station EPC bid documentation ready to issue– Bidders pre-qualified– Bids ready subject to GSA Heads of Terms

Regulatory and other approvals– All EIA’s approved– Kudu Power Company (Pty) Ltd. Registered– Applications for various licences in process

Financing– Pre-qualification for lead arrangers issued

Schedule considerations

Nampower requires 13 months from HOT until project sanction– If HOT in Q4 2006 expected project sanction end 2007/early 2008– First gas Q4 2010/Q1 2011 (+3 months slack for weather window)– Full power output Q4 2011/Q1 2012 = GSA fully activated

Project in a critical phase

Commercial closure required soon

Kudu Gas ProjectPhase 2 studies

Determine development scenarios for 1, 2, 3 and 4 Tscf reserve threshold cases in addition, or as alternatives, to Phase 1 gas-to-power.

Options considered– Pipeline to RSA

– update Shell costs– LNG (Liquified Natural Gas)

– Conventional– “Niche LNG” – LNG Ltd.

– FLNG (Floating Liquified Natural Gas)– Confirm viability of FLNG specifically offloading

– CNG (Compressed Natural Gas)– Check viability of CNG technology– Onshore vs FPSO processing

– GTL (Gas to Liquids)high technical and commercial risk – excluded from further study

Phase 2 study context & options

Kudu Phase 2 Gas export to RSA

– Detailed Shell study – Costs updated by JPKenny– Identified alternative case with high pressure pipeline– 3 Major & 17 minor rivers & 20 road & rail crossings– Proven technology

Kudu Phase 2Marine study report by Global Maritime

FLNG– not feasible due to environment– Offloading systems technology – not

developed at this time– Excluded from further study

Harbour for LNG– New harbour construction along coast is very

expensive– Only natural harbour on Namibian coast is

Luderitz

Kudu Phase 2 – LNG (Liquified Natural Gas)

LNG conventional– LNG plants have vast range in size– Sheltered offloading required – Luderitz– Established system and markets– Kudu markets need to be identified/secured

LNG niche– LNG Limited offer small scale and modular units

for more remote areas– Claim higher efficiency with ammonia in lieu of

mixed gas– Scaled up from 200 ktpa for Kudu– Appears more cost effective

Kudu Phase 2 – CNG (Compressed Natural Gas)

– EnerSea have provisional class approval from ABS– Competitive between extended pipeline and

minimum economic LNG facility distance – Technology is new and technical evaluation required

mainly offshore loading system and construction risk

Conclusions

Development scenarios exist in addition, or as alternative to gas to power project

Several options feasible between 1 - 2 Tscf

Niche LNG may even be feasible with 1 Tscf

Kudu Gas Project2007 Drilling campaign

Geological insights– 93/96 3D seismic reprocessed – New geological model developed

Further appraisal required to test multi-Tscf play

At least two wells needed to test and confirm this model

Kudu field upside

Kudu East

Kudu Main Field

Schematic – new geological model

K3 reservoir• higher productivity

• restricted to main field area

• Preserved by lava

K1 reservoir• Lower productivity

• Aerially extensive transgressive shoreface sands

Kudu area geological model

Kudu 2007 Drilling Overview & Field Location

Logistically remote area– 170 km to Oranjemund

– 250 km to Luderitz

– 800 km to Windhoek

– 800km to Cape Town

Kudu 2007 Drilling - planning progress

Rig contract and operations– Signed contract for Pride South Seas– 2 firm wells

Drilling planning– Luderitz port for logistics operations– Well design accommodates suspension for

production– EMPR approved– Expected spud date mid February to end March

2007– Drill and test 2 appraisal wells

• +- 90 days per well• Initial results in May and August 2007

Summary

Phase 1 gas to power project in a critical phase

Phase 2 – There are viable potential options beyond and/or as alternative to gas to power

2007 Drilling program– Drilling of two wells to demonstrate multi-Tscf upside potential Q1 2007