By Dr Bongani Sayidini
South Africa is at crossroads as we grapple with energy security of supply challenges. Load shedding and the push for renewable energy have underscored the need for a reliable, sustainable power supply in South Africa. As a nation seeking to revive its economy, we must carefully assess our natural resources and harness their potential to drive economic growth.
South Africa is potentially endowed with oil and gas. The Petroleum Agency SA (Pasa) estimates that the country holds 27 billion barrels (bbls) and 60 trillion cubic feet (tcf) of prospective oil and gas resources on the south, west, and east coasts. The estimate for the onshore exceeds 200 tcf of prospective shale gas resources, biogenic gas, and coal bed methane. These resources are waiting to be tapped as part of a just energy transition and a more sustainable energy mix. Pasa plays a crucial role in that regard and must strike a delicate balance to ensure the exploration and sustainable development of the country’s oil and gas resources, that integrates, economic, social, and environmental protection.
Pasa is responsible for promoting investment in oil and gas exploration and sustainable development in the country and acts as the custodian of the national petroleum exploration and production database. Occasionally it is mandated by the Minister of Mineral Resources and Energy to undertake strategic projects to better understand the country’s petroleum resources and support regulation and development of the upstream petroleum sector.
South Africa’s energy crisis is not just the rolling and sustained electricity blackouts over the last few years, but also a looming crisis in the supply of natural gas and refined petroleum products, which will have severe economic consequences.
We are already heavily dependent on imports of crude oil, and refined petroleum products - our largest imported product category at 15-20% of total imports per annum. This practice has the largest negative impact on the country’s balance of payments and poses a risk to the country’s energy security and sovereignty.
Another concern is depleting gas supply to the northern gas corridor, currently supplied with imported gas from Mozambique’s Pande and Temane fields. Up to 56000 jobs are at risk should the gas reserves deplete without an alternative supply of gas.
Meanwhile, a number of natural gas discoveries have been made. These include an estimated 4.9 tcf contingent gas resource by AfroEnergey/Kinetiko in Amersfoort and Volksrus, Mpumalanga. This discovery near Sasol infrastructure and the Transnet’s Lilly pipeline is strategically located to replace the depleting imported gas from Mozambique should it be in sufficient commercial quantities.
Some 419 billion cubic feet (bcf) of natural gas and helium have also been discovered by Renergen’s Tetra4 in Virginia, near Welkom, Free State. Prospective natural gas resources estimated for this area exceed 1 tcf.
For the South corridor, in excess of 3 tcf in Block 11B/12B have already been discovered by TotalEnergies, and JV partners, Canadian Natural Resources, Qatar Energy and local entity Main Street. This gas is sufficient to sustain the PetroSA GTL Refinery in Mossel Bay at full capacity for another 30 years, having been sustained for 28 years from 1992 to 2020 with some 1.5 trillion cubic feet (tcf) of gas.
The construction of the refinery in Mossel Bay which lasted for 5 years from 1987 to 1992 was decided based on 1 tcf of gas that was discovered in the early eighties. That investment transformed Mossel Bay from a small fishing town to a thriving industrial hub with a massive dam (Wolwedans), a landfill site, shopping centres, hotels, schools, hospitals, and clinics as well as sustained job creation.
The socio-economic benefits of the Block 11B/12B development could sustain about 1500 direct jobs at the GT Refinery in Mossel Bay, approximately 5000 indirect jobs, and up to 42500 in employment opportunities. The development could contribute an estimated R22 billion annually to the country’s gross domestic product, R25bn annually in royalties and taxes to the fiscus, and some R26.5bn to the country’s balance of payments through petroleum products substitution.
Off the west coast, the IBhubesi gas and condensate discovery is located in shallow waters of the Orange Basin, approximately 380 km to the north-west of Cape Town. The gas field has a proven contingent resource estimated at 540 billion cubic feet (bcf) and prospectivity up to 8 Tcf of gas. Since gas was discovered in Block 2A in early 2000s, a number of development concepts and feasibility studies were conducted. Among the key challenges that hindered Block 2A gas being commercialised were a feasible gas market; gas field volumetrics/size and cost of production wells given complex geology.
Sunbird Energy with JV Partner, PetroSA, subsequently commissioned further studies to address these challenges and now have a better understanding of how these could be handled. While the Ibhubesi gas remained stranded due a lack of a market for gas on the west coast, that situation should soon change given the critical role gas can play in South Africa’s Just Energy Transition.
The upstream oil and gas sector could potentially give South Africa energy independence, as a net importer of oil and gas, South Africa is vulnerable to geopolitical events and oil price fluctuations.
By unlocking our oil and gas potential, we can reduce this risk, enhance our energy security, and boost the country’s economic growth. To do that we need deep technical skills and expertise, deep pockets, and partnerships all of which require an enabling environment.
We must do our part to enable local and international investment in our country’s oil and gas resources rather than chase it away, as could happen should the resistance towards oil and gas activities find support within our courts. The halting of the Shell seismic acquisition off the Eastern Cape Wild Coast remains a painful reminder.
Dr Bongani Sayidini is the Chief Operating Officer of the Petroleum Agency SA.
BUSINESS REPORT