network code - transnet pipelines

NETWORK CODE

Transnet Pipelines (“Transporter”)

an Operating Division of Transnet SOC LTD

Version 1.0

1 April 2014

TABLE OF CONTENTS PAGE

1. INTRODUCTION ............................................................................................................ 3

2. GAS REGULATION ........................................................................................................ 3

3. DESCRIPTION OF TRANSPORTER TRANSMISSION FACILITY .................................. 4

4. DEFINITIONS ................................................................................................................. 5

5 TRANSPORTATION OF GAS ......................................................................................... 7

6 FACILITIES OBLIGATIONS ............................................................................................ 7

7 EXIT POINTS................................................................................................................ 10

8 LINE FILL ...................................................................................................................... 11

9 OBLIGATIONS TO DELIVER AND SUPPLY ................................................................ 11

10 CONDITIONS FOR NEW SHIPPER ACCESS .............................................................. 12

11 METHOD BY WHICH A NEW SHIPPER MAY REQUEST ACCESS AND A TARIFF ... 12

12 QUALITY ...................................................................................................................... 13

13 MEASUREMENT .......................................................................................................... 14

14 LEAKAGES ................................................................................................................... 15

15 EMERGENCY COVER ................................................................................................. 16

16 ODORISING ................................................................................................................. 16

17 OTHER SOURCES OF GAS ........................................................................................ 16

18 BOOKING OF CAPACITY............................................................................................. 16

19 PLANNING AND NOMINATIONS ................................................................................. 17

20 MODIFICATION OF THE NETWORK CODE ................................................................ 19

ANNEXURE A – SPECIFICATION OF METHANE RICH GAS............................................... 20

ANNEXURE B – EXIT POINTS AND MINIMUM / MAXIMUM DELIVERY PRESSURES ......... 21

3 Network Code Version 1

1. INTRODUCTION

The National Energy Regulator of South Africa (NERSA) is mandated in terms of the National Energy Regulator Act, 2004 (Act No. 40 of 2004) (NERSA Act) to regulate the piped gas industry in terms of the Gas Act of 2001(Act no 48 of 2001) (the Gas Act). Section 4(h) of the Gas Act provides that the Gas Regulator must “monitor and approve and, if necessary, regulate transmission and storage tariffs.” In practice, this is interpreted as follows: In monitoring and approval;

NERSA will not set tariffs but will review tariff applications prepared by licensees or applicants for transmission and storage facilities;

NERSA can request licensees or applicants to amend the levels of tariffs or tariff structure or both; and

NERSA can approve or decide not to approve a tariff. If NERSA decides not to approve the proposed tariff, then section 4(h) of the Gas Act requires the Energy Regulator to regulate the tariff. The process to be followed in regulating the tariff is outlined in the Tariff Guideline. In regulating;

NERSA will regulate by determining the tariffs, if necessary, to ensure that NERSA is fulfilling its regulatory duties, inter alia by ensuring tariffs are cost effective and applied in a non-discriminatory manner.

For monitoring purposes, the application for a tariff must be provided on an annual basis, although applicants are allowed to apply for approval of tariffs for a period of several years. The approved tariff becomes the applicable tariff and discounts are permissible. It must be noted that the discounts should be consistent with the objectives of the Gas Act as well as section 22 of the Gas Act and the objectives of the Public Finance Management Act (No. 1 of 1999 as amended by Act 29 of 1999). The approved tariff will by virtue of section 22 of the Act apply to all Shippers.

Piped Gas Regulations promulgated in April 2007 require a transmission licensee to lodge the

guidelines for use of its transmission facilities with the Gas Regulator. The purpose of the guidelines

is to make publicly available information which enables potential transmission customers to

understand the procedure for obtaining access to a transmission pipeline, as well as to enter and

conclude negotiations with Transnet Pipelines (Transporter).

The guidelines include:

A detailed description of the gas transmission system indicating all entry and exit points;

All ownership boundaries;

Method by which tariffs are calculated;

Method by which a Shipper may request a tariff;

Contractual terms and conditions regarding use and payment;

Technical requirements for access to the network; and

The process to request access.

2. GAS REGULATION

The Parties acknowledge that this Code is subject to the Gas Act, 2001 (Act Number 48 of 2001)

and all Parties shall with respect to this Code comply fully with the applicable provisions of the Act

and the Regulations promulgated there under.


3. DESCRIPTION OF TRANSPORTER TRANSMISSION FACILITY

The Pipeline consists of two sections of high pressure steel pipeline of approximately 578 km in

length stretching from Secunda to Durban, joined where the original Durban Ogies Crude Oil

Pipeline cross Ingogo. The first portion of 16” diameter pipeline is from the Entry Point at Secunda

via Standerton and Volksrust to Ingogo and is approximately 153 km long. The second portion of

18” diameter pipeline is from Ingogo via Scheepersnek and Empangeni to Durban, terminating after

the last proposed Supply Point near the Island View area and is approximately 423 km long.


4. DEFINITIONS

4.1 “Bar" or “Barg” is as defined in ISO 80000-1: 2009/Cor 1:2011;

4.2 “Business Day” means any day of the week other than a Saturday, Sunday or public

holiday as gazetted by the government of the Republic of South Africa from time to time;

4.3 “CMS” means a Customer Meter Station, the point where ownership of gas is transferred

from the Shipper to the Shipper’s customer and it is operated at less than 15 Barg;

4.4 "Contract Year" means a period of time commencing at 0:00 on the first Day of April of

one contract year and expiring at 23:59 on the last Day of March of that contract year ;

4.5 "Code” means this Network Code and all the Annexures thereto;

4.6 "Cubic Metre" means with respect to Gas a quantity of one (1) standard cubic meter of

gaseous hydrocarbons at a temperature of 15° Celsius (15°C) and at a pressure of one

point zero one three two five (1.01325) Bar absolute and dry;

4.7 “Current Shipper” shall mean Sasol Gas Proprietary Limited;

4.8 “Day" means a period of time commencing at 0:00 on any calendar day and ending at

23:59 on the same calendar Day and "Daily" shall be construed accordingly;

4.9 "Deliver" means delivery of Gas into the Pipeline at the delivery pressure as reflected in

Annexure B;

4.10 "Delivery Facility" means such equipment, piping, gas treatment facilities and

compressors as may be necessary to enable Gas to be delivered into the Pipeline;

4.11 "Distribution System" means all equipment, piping and facilities immediately downstream

of the Exit Points;

4.12 "Distributor” means a distribution company as defined in the Gas Act and such distributor

shall for purposes of this definition be required to have a valid distribution licence issued In

terms of the Gas Act;

4.13 "Effective Date" means the Effective Date of the Commercial Agreement to which this

Code shall be annexed,

4.14 "Energy Content" shall be measured "real" and shall mean that number of megajoules

produced by the complete combustion at a constant pressure of 1.01325 Bar absolute of 1

cubic metre of gas at 15° C with excess air at the same temperature and pressure as the

gas when the products of combustion are cooled at 15° C and when the water formed by

combustion is condensed to the liquid state and the products of combustion contain the

same total mass of water vapour as the gas and air before combustion;

4.15 “Entry Point” means an inlet flange on the Pipeline connecting the Delivery Facility to the

Pipeline;

4.16 “Exit Points" means the outlet flange(s) of the Pipeline to which the Shippers’

Transmission and / or Distribution System is connected, the location of each as determined

in accordance with Clause 7;


4.17 "Gas" means a hydrocarbon substance in a gaseous phase Delivered by Shippers which

conforms to the Specification;

4.18 "Gas Act” means the Gas Act. 2001 (Act Number 48 of 2001);

4.19 “Gas Transportation Agreement” means the agreement between the Transporter and

Shippers for the transportation of gas through the Pipeline which, together with this

Network Code, forms the entire agreement between the Parties;

4.20 "Gigajoule” and “GJ" means one billion (1,000,000,000) joules, as defined in ISO 80000-1:

2009/Cor 1:2011;

4.21 “HPCMS” means a High Pressure Customer Meter Station which is operated above 15

Barg;

4.22 "Inlet Pressure" means a maximum pressure of 53 Bar gauge at the Entry Point;

4.23 "Line Fill" means that quantity of Gas which a Reasonable and Prudent Operator would at

any one time maintain in the Pipeline to enable Gas to be transported from the Entry

Point(s) to the Exit Point(s);

4.24 "Maximum Capacity of Pipeline" means the maximum quantity of Gas that is capable of

being transported by means of the Pipeline after the provision of necessary compression,

having regard to the design capacity of the Pipeline and the operation thereof in

accordance with the standard of a Reasonable and Prudent Operator and for purposes of

this Code such maximum capacity shall be 23 million gigajoule per annum;

4.25 "MegaJoule" and "MJ" means one million (1,000,000) joules, as defined in ISO 80000-1:

2009/Cor 1:2011;

4.26 "Month" means a period of time commencing on the 1st Day of any calendar month and

expiring on the last Day of the calendar month in question;

4.27 “NERSA” means the National Energy Regulator of South Africa;

4.28 "Outlet Pressure" means a maximum pressure of 53 Bar gauge at the Exit Point;

4.29 "Party" means either Shippers or Transporter as the context dictates and ''Parties'' means

both Shippers and Transporter;

4.30 "Pipeline" means the high pressure transmission pipeline as more fully described in

Clause 3 above;

4.31 “Reasonable and Prudent Operator" means a person seeking in good faith to perform its

contractual obligations with that degree of skill, diligence, prudence and foresight as

reasonably and ordinarily exercised by experienced operators engaged in the same line of

business under the same or similar circumstances and conditions and in accordance with

good operating practice including without limitation the applicable portions of ASME B31.8

(the operating standard for gas pipelines under pressure as published by the American

Society for Mechanical Engineers) as it applies to the Pipeline;

4.32 “Relative Density" means the relative density of Gas as set out In the Specification

contained in Annexure A;


4.33 “Shipper” means any party that entered into a Gas Transportation Agreement with the

Transporter to convey Gas by means of the Pipeline;

4.34 "Specification" means the specification of Gas as set out in Annexure A;

4.35 “Supply" means the making available of Gas for off take at an Exit Point;

4.36 “Supply Pressure” in respect of each Exit Point shall be the pressure determined in

accordance with Clause 6;

4.37 “Trader” means a person carrying on the business of trading in gas as defined in the Gas

Act that is required to have a valid trading licence issued in terms of the Gas Act;

4.38 “Transmission System” means all equipment, piping and facilities immediately upstream

of the Exit Points;

4.39 “Transportation Tariff” means the tariff expressed in Rand/GJ payable for the

transportation of Gas in terms of this Code as determined in accordance with Clause 10;

4.40 “Transporter” means Transnet Pipelines an Operating Division of Transnet SOC Ltd;

4.41 In this Code, unless the context otherwise requires:

(a) All references to Clauses or Annexures shall be references to Clauses or Annexures

to this Code;

(b) the headings in this Code are inserted for convenience only and shall not affect the

interpretation or construction of the Code;

(c) when any number of Days is prescribed in this Code, same shall be reckoned

exclusively of the first and inclusively of the last Day unless the last Day falls on a

Saturday, Sunday or public holiday, in which case the last Day shall be the next

succeeding Day which is not a Saturday, Sunday or public holiday;

(d) "Including" means including without limitation;

(e) words importing the singular shall include the plural and vice versa;

(f) words importing the masculine shall include the feminine and neuter and vice versa;

(g) all references to persons include reference to their successors in title and permitted

assigns; and

(h) reference to any statute, by-law, regulation, rule, delegated legislation or order will

also include any amendments, modifications or replacements from time to time as

well as any by-law, regulation, rule, delegated legislation or order made thereunder.

5 TRANSPORTATION OF GAS

Shippers shall Supply Gas to the Transporter at the Entry Point for transportation in and through the

Pipeline and the Transporter shall transport to and Deliver at the relevant Exit Points such Gas in

accordance with the terms herein contained.

6 FACILITIES OBLIGATIONS

6.1 The Transporter shall at its cost provide the Pipeline for the transportation of Gas along a

route stretching from Secunda via Empangeni to Durban and comply with and maintain the

structural requirements of the high pressure transmission pipelines.


6.2 The Transporter shall at its own cost provide and install at the Exit Points all piping,

adaptors, and equipment necessary between the Pipeline and the inlet flange(s) of the

Shippers’ Distribution and/or Transmission Systems in order to connect such Distribution

and/or Transmission Systems to the Pipeline.

6.3 (a) The Transporter shall at its own cost install any and all equipment including

pipeline compression stations as may be necessary to ensure the efficient

transportation of all quantities of Gas in terms hereof and to ensure the Supply thereof

to the Exit Points in order to ensure the Transporter’s capability to transport Gas

through the Pipeline for Shippers in accordance with the Maximum Capacity (based

on the obligation of SHIPPERS to Deliver Gas to the Transporter at the required

pressure up to a maximum pressure of 53 Bar gauge) of the Pipeline to the Exit Points

as contained in Annexure B.

(b) Should Shippers at any time after the Effective Date nominate additional Exit Points in

accordance with the provisions of Clause 7, and the Transporter is required to install

compression stations and/or related equipment in order to continue to ensure its

capability to transport Gas through the Pipeline for Shippers in accordance with the

Maximum Capacity of the Pipeline taking into account such additional Exit Points, the

Parties shall meet to negotiate, in good faith, appropriate measures to be implemented

in order to take account of the expenses regarding the installation of such

compression stations.

6.4 Shippers shall at their own cost construct and install the Delivery Facility as well as such

Transmission and / or Transmission and / or Distribution Systems as it may from time to time

deem necessary which shall be technically and operationally compatible with the

Transporter’s Pipeline, equipment and facilities.

6.5 Shippers shall at their own cost install all pressure reducing facilities which may be

necessary to off-take Gas at the Exit Points.

6.6 Shippers shall at their own cost install facilities prior to the Entry Point to provide such

delivery pressure as may be necessary to enable the Transporter to Supply Gas to the Exit

Points, subject to a maximum Inlet Pressure of 53 Bar. Thereafter the Transporter shall be

obliged to provide the necessary pressure in terms of Clause 6.3. Shippers shall install,

operate and maintain appropriate control and protection equipment to ensure the pressure at

which Gas is Delivered does not exceed the maximum Inlet Pressure of 53 Bar.

6.7 The Transporter shall when requested by Shippers assist Shippers in the routing,

construction and installation of Transmission and / or Distribution Systems. The terms upon

which such assistance shall be provided shall be agreed upon by the Parties at the time that

each such request is made.

6.8 Shippers shall to the standard of a Reasonable and Prudent Operator, operate and maintain

their facilities to enable them to meet their obligations in terms of this Code.

6.9 Should the Parties need to undertake any maintenance in respect of their respective facilities

which would disrupt or prevent the Delivery, Entry or Exit of Gas, they shall meet to discuss

such maintenance and endeavour to coordinate it with the requirements of the Shippers'

customers. In order to facilitate compliance with this Clause 6.9:

(a) The Transporter shall not later than 3 (three) Months prior to the start of each Contract

Year provide to Shippers details of any anticipated maintenance programme and


schedule for that Contract Year in respect of the Pipeline. Not later than three (3)

Months prior to the start of any planned shutdown referred to in such notification to

Shippers, the Transporter shall provide to Shippers a notice specifying the planned

period of such shutdown;

(b) Shippers shall not later than 3 (three) Months prior to the start of each Contract Year

provide to the Transporter details of any anticipated maintenance programme for their

distribution network and any of the upstream facilities which may have an impact on the

Delivery of Gas during that Contract Year. Not later than 3 (three) Months prior to the

start of any planned shutdown referred to in such notification to the Transporter, all

Shippers shall provide to the Transporter a notice specifying the planned period of such

shutdown; and

(c) The Parties will liaise and co-operate with each other and will use reasonable

endeavours to ensure, that in each Contract Year, their respective planned shutdowns

coincide with the planned shutdowns of each other's applicable facilities.

6.10 Should either of the Parties need to undertake any construction activities in respect of their

respective facilities as provided for in this Clause 6 which would affect any Delivery, Entry or

Exit of Gas, they shall meet to discuss such construction and the scheduling thereof and

endeavour to coordinate it with the requirements of the Shippers' customers.

6.11 During the duration of the Code the Transporter shall, at its own cost:

6.11.1 provide, at the standard of a Reasonable and Prudent Operator, the Pipeline and

related facilities referred to in Clauses 6.1, 6.2 and 6.3 which shall be sufficient to

meet the Transporter's delivery obligations under the Code.

6.11.2 reserve in favour of Shippers such capacity within the Pipeline as may be

necessary to enable Shippers to exercise their rights, and the Transporter to fulfil

its obligation in terms of this Code in respect of the transportation of Gas through

the pipeline up to the current Maximum Capacity of the pipeline (at least 23

MGJ/a);

6.11.3 operate and maintain the Pipeline in accordance with the standard of a

Reasonable and Prudent Operator;

6.11.4 operate a manned control room on a 24 (twenty-four) hour and 7 (seven) Days per

week basis in respect of the Pipeline and provide Shippers with reasonable access

to such information generated in the control room;

6.11.5 operate and maintain in the control room referred to in Clause 6.11.4 the

necessary infrastructure to continuously monitor pressures at the Entry Points of

the Pipeline and the various Exit Points;

6.11.6 maintain and repair the Pipeline and all installations and replacements thereto in

accordance with the standard of a Reasonable and Prudent Operator and all

applicable laws and regulations (including without limitation any and all applicable

occupational health and safety and environmental legislation) and in such manner

as shall keep the Pipeline in good working order and condition so as to ensure,

subject to Clause 6.3, the efficient transportation of all contracted quantities of Gas.

6.12 If notwithstanding compliance by the Transporter with its obligations in terms of Clause 6.11

and as a result of circumstances beyond the control of the Transporter, the Pipeline is


rendered technically inoperable for the transportation of gas at a volume less than the

aggregated booked or planned capacity for all aggregated Shippers volumes for the Contract

Year in question, the Transporter shall notify Shippers in writing within 72 hours. A notice in

terms of this Clause 6.12 shall contain full particulars of:

6.12.1 the nature and extent to which the Pipeline has become technically inoperable,

including without limitation, the extent of and anticipated duration which the

capacity of the Pipeline will be affected;

6.12.2 the circumstances leading to the inoperability of the Pipeline;

6.12.3 confirmation by the Transporter that it complied with all its obligations in terms of

this Clause 6;

6.12.4 any and all other information which may be relevant to the condition of the Pipeline

in the context of this Clause 6.12,

6.13 In response to any notice issued by the Transporter in terms of Clause 6.12, Shippers shall

be entitled to require further particulars regarding any of the information contained in such

notice. Such request for further particulars shall be submitted in writing to the Transporter

within 60 (sixty) Days of receipt of a notice in terms of Clause 6.12 and the Transporter shall

submit such particulars within 30 (thirty) Days of the receipt of the request in question.

6.14 Within 30 (thirty) Days of the submission by the Transporter of further particulars in terms of

Clause 6.13 the Parties shall meet to negotiate in good faith with a view to agree on

appropriate measures to be taken in the context of the circumstances.

6.15 Should the Parties fail to reach agreement on appropriate measures to be taken pursuant to

Clause 6.14 within three (3) Months of their first meeting in this regard, either party shall be

entitled to refer the matter for resolution in terms of the dispute resolution provisions of the

Gas Transportation Agreement.

7 EXIT POINTS

7.1 The Exit Points at which the Transporter shall Supply, and at which Shippers shall off-take

Gas, for the duration of the Commercial Agreement are reflected in Annexure B hereto

7.2 Shippers may nominate future Exit Points at which the Transporter shall be obliged to Supply

Gas by giving the Transporter not less that 3 (three) Months written notice prior to the date

on which Shippers applies to NERSA for a Construction Licence to off take Gas at such Exit

Point

7.3 Such notice shall:

7.3.1 clearly identify the location of the Exit Points;

7.3.2 specify the date from which Shippers wishes to off-take Gas from such Exit Points;

7.3.3 contain the Shippers’ best estimate of the anticipated annual and Daily off-take of

Gas from such Exit Points;

7.3.4 specify the Exit Pressure at which Gas is to be supplied at such Exit Point.


7.4 The Transporter may only refuse additional Exit Points proposed by Shippers by reason of

the Maximum Capacity of the Pipeline having been reached, or if the anticipated volumes do

not justify extensions to the Pipeline where such extensions are to be undertaken at the cost

of the Transporter or if the proposed volume would cause the Maximum Capacity of the

Pipeline to be exceeded or the remaining downstream portion of the Pipeline will be

rendered incapable of performing at the required operating levels. Unless a nominated Exit

Point is refused by the Transporter in writing within 90 ( ninety) Days of receipt of the notice

referred to in Clause 7.2, the Parties shall fulfil their obligations in terms of Clause 6 to

enable Gas to be Delivered, Supplied and off-taken at such Exit Points by the date contained

in Shippers’ aforesaid notice.

7.5 If subsequent to giving notice in terms of Clause 7.2 Shippers decide to no longer utilise

such new Exit Point prior to such new Exit Point having been commissioned or within 3

(three) Months after the commissioning of such new Exit Point, the Transporter shall be

entitled to recover from Shippers any and all actual cost incurred by the Transporter limited

to the maximum of the Transporter construction contract value in respect of such new Exit

Point up to the date of such notice by Shippers, which costs have been incurred by the

Transporter pursuant to the Transporter’s applicable obligations in terms of Clauses 6.2 and

6.3(b).

7.6 Subject to Clause 7.5, Shippers may withdraw any existing Exit Point by giving the

Transporter not less than 30 (thirty) Days written notice of such withdrawal. Such notice shall

identify the Exit Point withdrawn and contain the date on which such Exit Point is to be

withdrawn. The Transporter shall cease to Supply Gas to such Exit Point from the date

specified in the aforesaid notice.

8 LINE FILL

Shippers shall at their own cost provide sufficient Gas for Line Fill and they shall at all times remain

the owners of Line Fill Gas in the Pipeline. The Transporter shall advise Shippers of the required

volume of Line Fill to be introduced into the Pipeline.

9 OBLIGATIONS TO DELIVER AND SUPPLY

9.1 Shippers shall not on any Day be obliged to Deliver Gas at the Entry Point in the same

quantities as the aggregate quantities off taken on such Day at the Exit Points. Accordingly,

provided Shippers meets their obligations in terms of Clause 9.2, Shippers may Deliver

quantities of Gas which may be less than the aggregate of quantities off taken and/or

Shippers may, during periods of low off take, Deliver quantities in excess of the off take in

order to Line Fill the Pipeline, subject to the procedures, specifications and tolerances

agreed upon by the Parties from time to time.

9.2 Having regard to available Line Fill, Shippers shall, from the Effective Date, be obliged to

Deliver to the Transporter, at the Entry point, such quantities of Gas as may be needed to

enable the Transporter to fulfil its obligations in terms of Clause 9.6.

9.3 Shippers shall at least 180 (hundred and eighty) Days prior to the start of each Contract Year

inform the Transporter in writing of its good faith best estimates of the quantity of Gas which

Shippers plan to Deliver during each month of such Year in terms of this Code.

9.4 Shippers shall at least 30 (thirty) Days prior to the start of each calendar month inform the

Transporter of (i) the quantity of Gas which Shippers plan to Deliver during the month in


question as well as (ii) the quantities of Gas required by Shippers to be Supplied by the

Transporter at the applicable Exit Points;

9.5 The operational personnel of the Parties shall on an on-going basis and as required from

time to time communicate with each other in order to determine and record the quantities of

Gas Delivered by Shippers and the volumes of Gas off-taken by Shippers and Supplied by

the Transporter.

9.6 The Transporter shall from the Effective Date, be obliged to accept Gas Delivered by

Shippers and to Supply, on each Day, to the relevant Exit Points the quantifies of Gas as

may be notified by Shippers to the Transporter in writing from time to time pursuant to

Clause 9.4 and subject to the Pipeline continued to being operated in a safe and prudent

manner.

9.7 Should the Transporter on any Day or part of a Day at any Exit Point(s) fail, for reasons other than to effect any repairs to the Pipeline, unable to effect known online (hot work) methods or Shippers’ failure to comply with Clause 9.2 or for reasons of Force Majeure, to Deliver Gas in accordance with its obligations in terms of Clause 9.2, then the Transporter shall be liable to pay to Shippers an amount in respect of each Exit Point at which such failure occurred calculated as follows: P = AHV x T x TT Where P = the amount payable by Transporter; AHV = the average hourly volume of Gas in GJ Supplied at the Exit Point during the 30 (thirty) Days immediately preceding the Day on which the failure occurred; T = the duration in hours of the failure to Supply at the Exit Point in question; and TT = the Transportation Tariff applicable on the Day on which the failure to supply occurred.

9.8 If the Transporters’ failure to supply, as mentioned in Clause 9.7, is as a result of the conduct

of a specific Shipper or Shippers, the Transporter will have the right to claim against the defaulting Shipper/s on the same basis as set out in Clause 9.7.

10 CONDITIONS FOR NEW SHIPPER ACCESS

The Transporter will provide Shippers access to uncommitted capacity on the Pipeline provided that

it is, in the Transporters’ discretion, technically and operationally feasible.

11 METHOD BY WHICH A NEW SHIPPER MAY REQUEST ACCESS AND A TARIFF

Requests for access to the Pipeline will be dealt with in accordance with this procedure. The

procedure sets out the process to be followed and criteria to be observed.

11.1 The process is initiated whenever a request for access is received from a potential Shipper;

11.2 Subsequent to initial contact, any request must be reduced to writing, and must include the

following minimum information within the parameters of a Non-Disclosure Agreement

between the Transporter and the potential Shipper:

Name of the requester


The location of all Entry Points

The annual volumes to be transported

The route of the gas being transported with the location of all Exit Points

The specification of gas to be transported

Temperature and pressure of gas to be transported

Load factor of gas to be transported

Duration of the transmission service (no of years)

Envisaged ownership boundaries

Envisaged boundaries of distribution and/or trading licenses (if relevant)

Evidence of supply and customer agreements

Evidence of creditworthiness and ability to fulfil payment obligations

11.3 On receipt of the written information, the Transporter will do the following:

Determine the suitability of the gas in terms of adherence to specifications (composition,

temperature and pressure)

Determine if any uncommitted pipeline capacity is available as per the route requested

Determine whether new infrastructure is required

Provide the Transmission tariff as published by NERSA to the potential Shipper

11.4 The general technical requirements for access to the transmission network are:

Spare capacity exists in the transmission line.

The Shipper’s gas quality specification is as per Annexure A.

The Shipper’s gas pressure, temperature and load factor are compatible with the

transmission line.

Such access will not negatively affect supply to existing users.

Such access will not result in unsafe operation of pipelines.

Such access will not result in increased risk to the environment.

Such access is technically and economically feasible

11.5 Access will be subject to normal commercial terms and practices and subject to negotiation.

12 QUALITY

12.1 The Gas Delivered by Shippers at the Entry Point shall conform to the Specification or such

other agreed specification determined in accordance with Annexure A

12.2 Shippers shall at their own cost install and maintain at or prior to the Entry Point the

necessary measuring equipment to determine the quality of Gas Delivered and shall on

request by the Transporter, supply the Transporter with copies of all results of such

measurements. Should the Transporter at any stage require real time information with

regard to such readings, the Transporter may at its cost install the necessary equipment to

provide such real time information.

12.3 Subject to Shippers complying with their obligation in terms of Clause 12.1, the Transporter

shall ensure that Gas Supplied at the Exit Points conforms to the Specification. The

Transporter shall not do anything, nor, subject to Clause 17.2, transport any other Gas or

product through the Pipeline, if it could result in the Gas Supplied at the Exit Points failing to

conform to the Specification.

12.4 Should the Transporter Supply Gas at any of the Exit Points which fails to conform to the


Specification, Shippers may:

12.4.1 refuse to off take all or part of the Gas until the failure has been remedied in which

event the Transporter shall pay to Shippers, provided that Shippers have complied

with their obligation in terms of Clause 12.1, the replacement value of such off

specification gas at an amount equal to the volume of such off specification gas

having to be replaced multiplied by the cost price of gas and the Transporter shall

also remain liable as provided for in Clause 9.7, and the Transporter will have a

right to claim from defaulting Shipper/s as provided for in Clause 9.8; or

12.4.2 off-take all or part of the Gas and in such event the Transporter shall repay to

Shippers, provided that Shippers has complied with their obligation in terms of

Clause 12.1, all costs and expense reasonably incurred by Shippers or for which

Shippers are liable:

(a) In clearing or cleaning any installation downstream of the Exit Points as

may be necessary following the off-take of such Gas; and

(b) In any measures taken by Shippers or by Shippers’ customers which are

reasonably required to render such Gas fit for Shippers’ or Shippers’

customers' requirements.

For purposes of Clause 12.4 the cost of Gas to Shippers shall be the cost as

certified by the external auditors of Shippers.

12.5 Should a Shipper permit any gas or other product to enter the Pipeline which does not

conform to the Specification, the Shipper shall be liable for all costs and expenses

reasonably incurred by the Transporter in clearing and cleaning the Pipeline of such gas or

product, and the costs and expenses incurred by any other Shipper in clearing or cleaning

its or its customers installations of such gas or product.

13 MEASUREMENT

13.1 Shippers shall, at the Entry Point, install metering equipment which shall be capable of

continuously measuring quantities of Gas Delivered at the Entry Point and ensure that

quantities of Gas Delivered are continuously measured. Shippers shall also, at the Delivery

Facilities install measuring equipment which shall be capable of continuously measuring the

Energy Content of Gas Delivered at the Entry Point and ensure that the Energy content of

Gas Delivered is continuously measured.

13.2 The volumes of Gas Supplied shall be the aggregate volumes of Gas delivered by Shippers

to their customers as determined by the current Shipper’s metering equipment, or new

Shipper’s connection points, installed at each customer's premises, or as may be

determined by mutual agreement between the Parties from time to time. The quantity of

Gas in Gigajoules Supplied will be determined as set out in the Gas Transportation

Agreement.

13.3 Shippers shall within 3 (three) Business Days of the end of each Month provide the

Transporter in writing with proof of the volumes of Gas Delivered and off-taken during such

Month.

13.4 The registers of the metering equipment referred to in Clauses 13.1 and 13.2 shall be prima

facie evidence of the volumes of Gas having passed through such metering equipment.


13.5 Shippers shall, prior to the Effective Date, have the metering equipment referred to in

Clauses 13.1 and 13.2 calibrated in accordance with the procedure and specification

determined by agreement between the Parties from time to time and thereafter sealed in

such a manner so as to prevent any tampering therewith. Thereafter Shippers shall have

such metering equipment recalibrated in accordance with the aforesaid procedure and

specification and sealed as aforesaid once every 3 (three) years for both turbine meters and

rotary meters. The Transporter shall, on request by the Transporter and at its own cost, be

entitled to be present to witness any of the calibrations carried out in terms of this Clause

13.5 or such other frequency as the Parties may agree from time to time.

13.6 The Transporter shall have access at reasonable times to the metering equipment referred

to in Clauses 13.1 and 13.2.

13.7 Should the Transporter at any time believe that any of the metering equipment referred to in

Clauses 13.1 and 13.2 is registering inaccurately; the Transporter may request that the

metering equipment be calibrated as provided in Clause 13.5. Should such calibration prove

that the metering equipment was in fact registering accurately; the cost of such calibration

shall be paid by the Transporter. Should the calibration prove that the metering equipment

was in fact registering inaccurately; the cost of calibration shall be paid by the Shipper/s.

13.8 Should it at any time be ascertained that any metering equipment referred to in Clauses

13.1 and 13.2 is registering inaccurately, then:

13.8.1 the metering equipment shall be assumed to have registered inaccurately to the

degree so found since the penultimate date on which the metering equipment

was read except in a case where it is proved to have begun to register

inaccurately as described on some later date; and

13.8.2 the amount of allowance to be made to or on Shippers in consequence thereof

shall be paid to or by Shippers as the case may be.

14 LEAKAGES

The Transporter, or the operator if the Transporter assigned its obligations to an operator, shall:

(a) to the standard of a Reasonable and Prudent Operator and in accordance with the operating

procedures agreed upon by the Parties from time to time, install, operate and maintain pressure

monitoring equipment and during physical route patrols along the Pipeline route utilise leakage

detection equipment;

(b) upon detection of any leakage take immediate action to correct or eliminate the cause of such

leakage;

(c) at all times operate the Pipeline in such a manner as to prevent and/or limit the amount of Gas

leakage.

(d) Be liable to Shippers for any loss of Gas between the Entry Point and the Exit Points, which is

in excess of 1% (one percent) of the quantity Delivered by Shippers at the Entry Point having

regard to the standards and permissible tolerances of metering equipment as determined in the

measurement and calibration procedure agreed upon between the Parties from time to time.

Such liability shall be calculated at the cost of Gas to Shippers certified as provided for in

Clause 12, multiplied by the loss expressed in Gigajoules.


15 EMERGENCY COVER

15.1 The Transporter shall provide a continuously attended telephone service at which Shippers

and Shippers' customers may report any escapes of Gas, and on receipt of such a report,

the Transporter shall as soon as is reasonably practicable in consultation with Shippers

make safe Shippers' facilities or Shippers' customers facilities by such measures as may be

appropriate.

15.2 The Transporter shall at all times during the duration of this Code ensure that an

appropriate emergency plan in respect of the Pipeline is in place and communicated to all

relevant authorities along the Pipeline route. The Transporter shall consult Shippers in the

preparation and periodic review of such emergency plan and shall provide Shippers with a

copy of the emergency plan as well as any amendments thereto.

16 ODORISING

Shippers shall at their sole expense odorise the Gas Delivered to the Transporter in terms of this

Code prior to the Delivery thereof to the Transporter as specified in Annexure A.

17 OTHER SOURCES OF GAS

17.1 The Parties confirm that any Shipper that may have access to gas from other sources may

in future also become eligible for transportation through the Pipeline.

17.2 Should any Shipper at any time during the duration of this Code wish to also transport such

natural gas and/or gas from other sources through the Pipeline, the Parties shall negotiate

in good faith in respect of any of the terms of this Code necessitating amendment in

consequence thereof, and any additional terms that may be required. It is hereby recorded

that the cost of any equipment necessary for the treatment of gas to conform to the

specification so determined shall be for the account of the Party wishing to have its gas

transported.

18 BOOKING OF CAPACITY

All Shippers shall be obliged to apply to the Transporter for long term entry and exit capacity at

Entry and Exit Points by submitting an application, no later than 1 October each year, which shall

specify the information required by the Transporter to process the long term entry and exit capacity

request, which shall include:

(a) the requested entry and exit capacity effective date which shall be the first Day of a calendar

month provided however, that the requested entry and exit capacity effective date shall, where

the request relates to a proposed Entry and Exit Point, be the first Day of the calendar month in

which the anticipated Entry and Exit Point commencement date occurs or the first Day of the

next calendar month;

(b) the duration for which the relevant Shipper wishes to book long term entry and exit capacity

(which shall be annual or multi-annual) and in the case of multi-annual entry and exit capacity

the number of whole multiples of 12 (twelve) Months for which the capacity is requested;

(c) the Entry and Exit Points at which entry and exit capacity is requested;


(d) the requested amount of entry and exit capacity (in GJ/d); and

(e) the identity of the relevant Shipper requesting entry and exit capacity.

(f) Booking requests should be submitted to the Transporter by respective Shippers at least 6 (six)

months prior to the entry and exit capacity effective date

(g) All capacity bookings will be deemed to be accepted unless declined by the Transporter within

30 Days of receipt of the Shipper’s booking application. The Transporter may only decline the

application based on unavailability of uncommitted capacity or in case of technical, operational

or economical infeasibility.

(h) In future, where multiple Shippers transport Gas through the transmission system, and in the

event of a Shipper defaulting by underutilising capacity, any clawback provision will be carried

by the offending Shipper. An equitable mechanism will be developed to ensure this.

19 PLANNING AND NOMINATIONS

19.1 Planning

The Transporter needs to obtain all gas planning from all Shippers so that forecasting can be done

for the most economical operation of the Transporter’s Transmission Pipeline.

19.1.1 Long Term Planning

All Shippers will submit a 10 (ten) year volume plan, before 1 July every year, indicating

the planned volume for the following 10 (ten) year period. This will inform the

Transporter of the volume that each Shipper plans to transport and will allow the

Transporter to make timeous investment decisions.

19.1.2 Medium term Planning

Arrange scheduled planning meetings with each Shipper to review the requirements of

major Customers of each Shipper to coordinate the medium term planning

requirements by no later than 1 October each year.

To be reviewed when other Shippers are allowed access to the Transmission Pipeline.

19.2 Nominations

19.2.1 Annual Nominations

No later than 25 (twenty-five) Days before the start of each Contract Year, the Shipper

shall notify the Transporter of its good faith best estimates for each Month of that

Contract Year of the quantity of Shipper Gas which the Shipper:

(a) intends to deliver to the Entry Point; and

(b) requires to be delivered at each Supply Point.

19.2.2 Daily Nominations

19.2.2.1 No later than 25 (twenty-five) Days before the start of every Month, the Shipper

shall notify the Transporter of its good faith best estimates for each Day of the


next 3 (three) Months of the quantity of Shipper Gas which the Shipper:

(a) intends to deliver to the Entry Point; and


19.2.2.2 No later than 09:00 hours on the Saturday immediately preceding each week, the

Shipper shall notify the Transporter of its good faith best estimates for each Day

of that week of the quantity of Shipper Gas which the Shipper:

(a) intends to deliver to the Entry Point;


19.2.2.3 No later than 14 (fourteen) hours prior to the start of a Day, the Shipper shall

notify the Transporter of the quantity of Shipper Gas, for that Day, which the

Shipper:

(a) will deliver to the Entry Point; and

(b) will off-take at each Supply Point; provided that the aggregate quantity

nominated at all Supply Points for the Day in question may not exceed the

Maximum Daily Booked Capacity, i.e. the Annual Booked Capacity in terms

of Clause 18 of this Network Code divided by 365 for the applicable Contract

Year.

19.2.2.4 The good faith best estimates provided by the Shipper in terms of Clauses 19.1,

19.2.2.1 and 19.2.2.2 shall neither be binding on the Shipper, nor shall they

create any obligations on the Transporter, but the nominations of quantities in

terms of Clause 19.2.2.3 shall constitute the Nominated Quantities of Shipper

Gas at the Entry Point as well as at the Supply Points for purposes of this

Network Code.

19.2.3 Changes in Nominated Quantities

19.2.3.1 In order to accommodate unforeseen changes in Gas usage by the Shipper's

customers, the Shipper may in accordance with this Clause 19.2.3 on any Day

request changes in quantities of Shipper Gas Nominated for that Day.

19.2.3.2 The Shipper may request that any of the quantities of Shipper Gas Properly

Nominated for a Day be decreased to any quantity, including zero, by giving no

less than 4 (four) hours' notice, subject to Clauses 19.2.3.3, 19.2.3.4 and

19.2.3.5.

19.2.3.3 The Shipper may request that the quantities of Gas Nominated for delivery to the

Entry Point and/or delivery at the Supply Points on a Day be increased upon

giving notice as follows:

(a) for any increase not exceeding 25% (twenty-five percent) of the aggregate

quantity of Shipper Gas Nominated for that Day, not less than 2 (two) hours’

notice;

(b) for any increase greater than 25% (twenty-five percent) but not exceeding

50% (fifty percent) of the aggregate quantity of Shipper Gas Nominated for

that Day, not less than 4 (four) hours' notice; and

(c) for any increase greater than 50% (fifty percent) of the aggregate quantity of

Gas Nominated for that Day, the Shipper shall give not less than 6 (six)

hours' notice.


19.2.3.4 Any notice by the Shipper in terms of Clauses 19.2.3.2 and/or 19.2.3.3 shall

contain details of the changes to the quantities of Shipper Gas Nominated in

respect of each of the Supply Points affected by a change in nominations in terms

of this Clause 19.2.3.

19.2.3.5 The Transporter shall use reasonable endeavours to comply with a request from

the Shipper in terms of this Clause 19.2.3 and will as soon as is practicable

inform the Shipper if it cannot comply with such a request.

19.2.3.6 The requested changes of the quantity of Gas Nominated for a Day under this

Clause 19.2.3 shall be subject to the following provisions:

(a) any increased aggregate Nominated quantity shall in no event exceed the

Maximum Daily Booked Capacity, i.e. Annual Booked Capacity divided by

365;

(b) there may not be more than 2 (two) requested changes per Day;

(c) the Transporter shall not be required to implement any change that would:

i. require the Transporter to make any additional investment, suffer any

penalty and/or alter or amend any booking or reservation of capacity in

the Transmission Pipeline previously made for Third Parties under

Permitted Third Party Access or under Other Shippers Agreements;

ii. in the opinion of the Transporter, acting as a Reasonable and Prudent

Operator, adversely affect the technical and/or operational integrity of

the Transmission Pipeline; or

iii. in the opinion of the Transporter, acting as a Reasonable and Prudent

Operator impair the performance or safe operation of the Transmission

Pipeline;

iv. impair the ability of the Transporter to discharge its obligations in terms

of this Agreement;

v. cause the Transporter to breach any of its license conditions

19.2.4 Acceptance of Nominations

At the Transporter’s discretion, and subject to the safe operating limits of the pipeline,

Shippers may nominate different quantities at the Entry Point and Exit Points. This

would allow Shippers to manage their stock of gas in the Pipeline.

Nominations will not normally be accepted where insufficient capacity has been booked.

Nominations above booked capacity may be accepted, at the Transporters discretion,

where capacity has been freed up by other Shippers not taking up their full capacity.

The aggregate of the exit nominations may not exceed the entry nominations

20 MODIFICATION OF THE NETWORK CODE

The Transporter, and / or any Shipper may propose modifications to the Network Code.

Consultation in relation to proposed modifications will be undertaken between the Transporter and

all Shippers but implementation of modifications will be in the discretion of the Transporter. Any

objections to modifications can be referred to NERSA.


ANNEXURE A – SPECIFICATION OF METHANE RICH GAS

Table 1 below is the Methane Rich Gas quality specification:

PROPERTY UNITS LIMITS NOTE

1. Energy content (HV) MJ/m3n 33,57 min

37,90 max 1

2. Wobbe index MJ/m3n 37,9 - 50,0 2

3. Relative density 0,56 - 0,66 3

4. Total sulphur mg/m3n 3,7 min

9,4 max

5. Composition of gas:

(a) Hydrogen

(b) Methane

(c) Carbon Monoxide

(d) Nitrogen + Argon

(e) Ethane and Ethylene

vol %

vol %

vol %

vol %

vol %

3,0 max

82,5 - 94,0

4,0 max

16,0 max

2,0 max

6. Stenching agent: Spotleak 1005 mg/m3n

mg/m3n

12,0 min

25,0 max 4

Table 1: Gas quality specification

Notes to Table 1:

1. Normal cubic meter (nm3) shall mean a cubic metre, the reference conditions of measuring at 00C,

101.325 kPa and free of water vapour at these conditions.

2. Wobbe index shall mean the index obtained when the energy content of the gas in MJ/nm3 is divided

by the square root of the relative density of the gas.

3. Relative density (relative molecular weight) shall mean the ratio of the average molecular weight of gas

to that of air (28.97)

4. Spotleak 1005 is a blend of tetra hydro thiophene and tertiary butyl mercaptan in a percentage ratio of

70:30.


ANNEXURE B – EXIT POINTS AND MINIMUM / MAXIMUM DELIVERY PRESSURES

AREA JOINT OWNER LOCATION MINIMUM

PRESSURE

MAXIMUM

PRESSURE

Durban South Insulation

Joint

Sasol Gas TRANSPORTER

Tie-in

20 barg 53 barg

Avoca Insulation

Joint


Tie-in

20 barg 53 barg

Phoenix Insulation

Joint


Tie-in

20 barg 53 barg

Verulam Insulation

Joint


Tie-in

20 barg 53 barg

Mandini Insulation

Joint


Tie-in

20 barg 53 barg

Empangeni Insulation

Joint


Tie-in

25 barg 53 barg

Empangeni – IHM

Insulation

Joint


Tie-in

20 barg 53 barg

Newcastle Insulation

Joint


Tie-in

20 barg 53 barg

Secunda Insulation

Joint


Tie-in

33 barg 53 barg

NOTE:

Although some areas only require 20 barg, it is recommended to apply the minimum 30 barg spec to all

areas, to make provision for possible co-generation business

network code - transnet pipelines

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