South Africa is a growing competitor in the oil and natural gas industry and its pole position was given a massive boost by the discovery in February 2019 of a gas field under the Indian Ocean between Jeffreys bay and George which could yield an estimated 1 billion barrels. The gas field, known as Brulpadda Block is South Africa’s first deep sea oil discovery – it covers an area of 19000 kilometres, is 3600 metres deep and is about four times bigger than all the gas finds in South Africa combined. In December 2019 the South African government published the Draft Upstream Petroleum Resources Development Bill to catalyse a new era of exploration and production.
The importance of gas for job creation
The boost to the gas industry will mean:
- Skills upgrades locally and nationally
- Infrastructure opportunities
- More connections to power
- Local supplier development fuelling SME growth
- Supply chain opportunities
- A pivot from mining skills to oil and gas capabilities
The gas industry in Sub-Saharan Africa is experiencing exciting new developments, owing to its presence in countries such as Mozambique and Namibia and the discovery of the offshore gas reserves in South Africa. Future development of regional gas fields will lead to natural gas becoming a more important source for meeting South Africa’s energy requirements. Ultimately, oil and gas could become the biggest players in the creation millions of jobs for the region.
Saldanha Bay Industrial Development Zone
Saldanha Bay’s Industrial Development Zone is contributing significantly to the growth in this sector:
“Several private investors have undertaken, at their own cost, bankable feasibility studies that demonstrate demand for repair, maintenance and equipment servicing facilities linked to the Oil & Gas and Marine Services sectors, and we look forward to announcing these investments very soon. The Saldehco Offshore Supply Base in the Port of Saldanha Bay is one such investment that has made good progress, with construction on the facility due to commence in Q4 2020 pending completion of design development and necessary statutory approvals. This facility will offer internationally competitive services to vessels passing along our coastline, as well as to projects looking to undertake surveys, exploration and production activity on the West Coast.” – David Maynier, Western Cape Minister of Finance and Economic Opportunities
Integrated Resource Plan 2019
In 2019, the first IRP update in more than ten years, contained plans for coal, gas and renewables, and a new generation of modular nuclear power plants. It describes a generation mix based on the demands of a growing population and reconciles ensuring energy security, minimising costs and meeting environmental commitments. “The planning framework must be dynamic and updated regularly to keep abreast of new developments in the energy sector,” – Minister of Mineral Resources and Energy, Gwede Mantashe.
“South Africa’s total refining capacity amounts to 704 megabarrels per day (Mbpd), of which 72% is allocated to crude oil refining (mostly of imported crude oil) with the balance allocated to synthetic fuel refining” – Lizel Oberholzer, Norton Rose Fulbright South Africa Inc.
According to the Petroleum Agency of South Africa, the onshore Karoo basin may contain significant quantities of shale gas. South Africa is the world leader in coal-to-liquid fuel production, and the Secunda Synfuels operation (owned by Sasol) is the world’s only commercially operating coal-based synthetic fuels manufacturing facility.
The potential for growth in the oil and gas industry in South Africa will have significant knock-on effects for job creation, the sector’s supply chain and the country’s future power mix. Engineering, construction, manufacturing, infrastructure development, logistics and waste management will all benefit significantly from the promising developments in this industry.
Thomson Reuters Practical Law: Oil and gas regulation in South Africa: overview
by Lizel Oberholzer, Norton Rose Fulbright South Africa Inc.
Global African Network
Dept of Mineral Resources and Energy