South Africa could potentially raise its gross domestic product (GDP) by 5% to 8% with the development of the upstream oil and gas industry, Minister of Mineral and Petroleum Resources Gwede Mantashe said at a conference yesterday.
In an address to the Africa Oil Week 2024 conference in Cape Town, Mantashe said unlocking South Africa’s oil and gas exploration opportunities for investment could have the same impact as it had in Namibia, where recent sizeable offshore oil and gas finds were already boosting its economy.
His views, however, come at a time when TotalEnergies recently announced its exit from one of South Africa’s biggest offshore gas exploration finds off the southern Cape coast, which has subsequently raised questions about foreign investor confidence in the local upstream oil and gas sector.
However, Mantashe responded to these concerns in a briefing, saying TotalEnergies had merely moved from a very difficult terrain to an exploration site that was much easier to exploit.
He said there were strong currents off the southern coast that made deep drilling and vessel mooring particularly difficult, which had resulted in TotalEnergies’ estimated gas price requirement being higher than market related prices that PetroSA had asked for.
The conference was attended by government ministers and oil and gas executives from over 20 African countries, and a central theme of closed-door discussions was the need to leverage Africa’s abundant oil and gas resources to directly benefit the African people.
Dr Omar Farouk Ibrahim, secretary general of the African Petroleum Producers’ Organisation (APPO), said many African countries would not be able to industrialise without using their petroleum resources, and developed countries, in their energy transition away from petroleum products, needed to give African countries a moratorium from being disallowed to make use of its oil and gas resources.
Mantashe said there was currently much interest in South Africa’s petroleum exploration resources, and several exploration projects in the Orange Basin were “gearing up for development”, including preparation work for drilling the Deep-Water Orange Basin (DWOB) block operated by TotalEnergies.
Other work included the proposed drilling of an exploration well, with the option to drill up to 4 additional wells in Block 3B/4B; the Northern Cape Ultra-Deep-Water Block had started with environmental authorisation processes for drilling; while “notable progress” had been made on Block 5/6/7 with a potential to start drilling exploration in the block in 2026 targeting large oil and gas resources.
Apart from drilling, major seismic exploration projects offshore were also planned between 2025 and 2026, including multi-client surveys by CGG South Africa, TGS, and Searcher.
Mantashe said upstream petroleum industry had always been regulated as an appendage to other industries, but this would change with the Petroleum Resources Development Bill, which had since been adopted by both houses of Parliament and was ready for assent into law by President Cyril Ramaphosa.
“We are convinced once the Bill is enacted into law, it will not only pave the way for an orderly development of the upstream petroleum industry, but will boost the country’s economic growth to 8% as is the case with Namibia…” he said.
“We appeal to the delegates at this conference and the investment community to continue investing [in] the development of oil and gas to enable a prosperous energy outlook for Africa and promote sustainable development.”
He said the South African National Petroleum Company (SANPC) had been established as a State-Owned Entity to carry the State’s share in petroleum projects and exploit some resources in its own right.
This company would comprise PetroSA, iGas and the Strategic Fuel Fund.
However, Mantashe said that a smaller management team had been left to deal with the financially problematic assets of PetroSA in the interim, so that PetroSA did not financially drain the SANPC.
He said that notwithstanding “the crusade against oil and gas development in South Africa”, over the last 10 years, the African continent had seen considerable interest in oil and gas blocks with major petroleum players making valuable investments in offshore basins through acquisition of new data.
Additionally, he said South Africa shale gas plays hosted by the Karoo Basin may contain up to 209 trillion cubic feet (tcf) of gas estimated for development, which provided opportunities for long term cheaper gas supply.
He said, however, they awaited environmental and water department authorisations for the shale gas exploration activities to be issued before lifting the moratorium on shale gas exploration was lifted in the region.
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