Johannesburg - Oil and gas are about to become South Africa’s new gold as the government unveils plans to tap into potentially large reserves off the country’s 3 900km coastline.
An estimated R100-billion of crude oil and 11 billion barrels of natural gas are believed to be sitting in the maritime territories off the west, east and south coasts. If those estimates prove true, then the country’s energy consumption needs would be satisfied for many years to come.
Reserves of this magnitude would also radically transform the economy and see billions of rand flow into the country over the next few years in the form of investment, and create thousands of jobs.
As he presented plans around the nascent oil and gas industry on Wednesday, President Jacob Zuma said his government wanted 30 oil wells drilled over the next 10 years, which “over the next 20 years, could lead to the production of 300 000 barrels of oil and gas per day”. But he said “uncertainty” around the extent of the hydrocarbon reserves was understandably high as the country’s deep waters remained largely unexplored and the studies upon which the estimated reserves were based were derived from geological studies.
To date only a handful of companies are drilling off-shore, among them French multinational Total (which began drilling for oil off Mossel Bay in June), and the Australian company Sunbird, which is developing the stranded gas field off Saldanha Bay on the West Coast.
That said, the world’s oil giants joined Zuma and his cabinet members in a hushed six-week so-called laboratory that began in June and it was their findings that Zuma unveiled on Wednesday.
Aptly named Operation Phakisa (meaning “hurry up”), the “lab” brought all the relevant players around the table to decide how best to develop the potential reserves, as part of Zuma’s new “business unusual” approach, according to Minister in the Presidency Jeff Radebe who will manage the Phakisa project into the future. (See Page 17)
On the part of the government a commitment was given to provide legal certainty to a sector that is relatively new to doing business with this country. Companies such as Total, Shell, Anadarko, Sunbird, Falcon, Chevron and ExxonMobil have all flocked to South Africa to tap into the hydrocarbon reserves.
But they have demanded more clarity on the regulatory frameworks that will guide the nascent industry.
They have also asked Zuma to reconsider the state’s stake of 20 percent, in all new oil and gas ventures, that was recently written into the minerals and petroleum act. Zuma appears to have listened and has sent the bill back to Parliament.
He has also pledged to harmonise legislation to ease bureaucracy, and has established a secretariat in Radebe’s office that will deal exclusively with Operation Phakisa.
In return he is looking for billions of US dollars in investments to bankroll what will arguably be one of the costliest projects the government has yet become involved in.
“We are creating an enabling environment for these companies to do business with our country,” Radebe said.
Industry leaders appear to be very positive. None were prepared to speak out ahead of Zuma’s announcement on Wednesday, saying that “we have signed up to this and we want to respect the partnerships we are forging”, in the words of one.
They all claim that though the reserves have yet to be tested, South Africa’s basin looks promising. In terms of gas, it is believed the country’s West Coast shares the same geology as that off Mozambique where large fields were discovered.
Radebe has pledged to skill-up more than 2 000 people as the industry begins to take off.
Though oil and gas are the driving force behind Operation Phakisa, the project essentially focuses on the “ocean’s economy” and will help develop the fields of fisheries and the ports.
“We have 30 000 vessels passing through our waters every year. Thirteen thousand dock in our ports, but we only maintain 5 percent of them. We have to change that,” said Radebe.
In response, Transnet, which manages the ports, has agreed to bring forward its expenditure that was planned for 2019 to meet some of the targets identified by Phakisa.
Sunday Independent