Mineral Resources and Energy Minister Gwede Mantashe. File Photo: IOL
JOHANNESBURG -  Minister of Mineral Resources and Energy Gwede Mantashe on Thursday urged Total, the French oil company to move speedily to bring the Brulpadda oilfield into production at the Africa Oil and Power conference in Cape Town.

“I urge Total to move speedily to the stage of production,” he said.

At the beginning of this year Total confirmed the existence of gas condensates in the Brulpadda field and at the time Mantashe said this discovery could be a "game-change" for South Africa.

Geophysical estimates have suggested a potential gas reserve in the range of 56 billion cubic meters, which is equivalent to some 300 million barrels of oil with Total saying that further exploration could raise this estimate to one billion barrels equivalent.

Mantashe said that security of energy supply was paramount and the various technologies of power supply should be seen as complementary, rather than competing with each other, for a slice of the energy pie.

“Security of supply is important for our country as we saw in the first quarter when load shedding resulted in a contraction in our economy. We must see the electricity supply sector not as a sector that is isolated from other sectors, but rather as a catalyst for growth,” he said.

The South African economy contracted by 3.1 percent in the first quarter when compared with the fourth quarter on a seasonally adjusted annualised basis. This was then followed by a 3.1 percent expansion in the second quarter. The constrained ability due to load shedding to produce in the first quarter meant that the goods producing sectors such as agriculture, mining, manufacturing and construction all suffered quarterly contractions and that had a spill-over effect into the trade, transport and electricity sectors. The absence of load shedding then resulted in a recovery in the second quarter, but transport, construction and agriculture still had quarterly declines.

Mantashe said  in order to act as a catalyst, the energy sector needed to lower costs so as to encourage other sectors to grow.

“We have witnessed how an adverse impact of high costs and unreliable supply of energy have on the productive sectors of the economy. In this regard, we believe that lowering the cost of energy should be a major area of focus in order to enable the growth of the extractive and manufacturing sectors.  Resource extraction requires vast amounts of energy. Consequently, when electricity costs are high, sustaining investment in resource extraction becomes a challenge,” he noted.

He also announced that the Coega Special Economic Zone (SEZ) will be the site of the first Liquid Natural Gas (LNG) import terminal, which will feed new gas to power plants. It will also be the point of converting existing peaking power plants from diesel to gas.

“On liquid fuels, it is an anomaly that we continue to import large quantities of diesel and petrol; when so many of our countries are endowed with oil.  Importation of refined products drains foreign currency reserves in many of our countries. Further, revenues obtained from the proceeds of exploration are used to purchase petroleum products.  

A collaborative approach is necessary to turn this around.  We need to attract investment in refining hubs throughout the continent,” he said.

In that respect the government was working with Saudi Arabian oil company Aramco to investigate the feasibility of establishing a refinery and associated petrochemical plants at Richards Bay.

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