South Africa to expand oil and gas sector

South Africa to expand oil and gas sector.png

The Department of Mineral Resources and Energy (DMRE) will “sustainably continue to develop” the country’s oil and gas resources to ensure energy security and alleviate dependency on oil imports.

Mineral Resources and Energy deputy minister, Dr Nobuhle Nkabane, speaking at the Southern Africa Oil Gas Conference on Wednesday, said it was vital for the country to continue with its exploration of fossil fuels.

“It is imperative to accelerate the exploration of oil and gas both onshore and offshore, as having our own petroleum resources will reduce our dependency on foreign oil and cushion our economies, in particular our citizens against imposed whirlwinds of crude price volatility,” Nkabane said.

She said the country had initiated policy intervention processes to boost the development and growth of the local oil and gas industry.

“The first intervention is the development of the Gas Master Plan, policy that outlines and guides the critical role of gas in South Africa while providing policy direction to the gas industry,” Nkabane said.

“We have also developed the Upstream Petroleum Development Bill seeking to ensure that the upstream petroleum sector is no longer regulated under the Mineral and Petroleum Resources Development Act, 2002 (MPRDA), but under discrete petroleum legislation.

“We believe the decoupling of the Upstream Petroleum Development Bill from the MPRDA will bring regulatory certainty and hopefully shore up investor confidence.”

Nkabane said natural gas is a key component of the Integrated Resource Plan (IRP) 2019 and accounts for at least 3% of the country’s energy supply.

“[The] continued exploration and discovery of indigenous gas is crucial for meeting our climate change targets and securing energy supply.”

Nkabane said the recent discovery of maiden gas reserves in Amersfoort, Mpumalanga, represents a “major boost in electricity generation capacity as the country was looking at different sources of energy.

“Mpumalanga is the epicentre of South Africa’s power generation because [it] has a high concentration of power stations, therefore the discovery of gas positions the province at the centre of the just energy transition and as a source of reference for the country’s emission-reduction targets.

“We have also seen that Europe is looking to Africa to diversify its gas supplies

“This presents a good opportunity and market for local gas beyond our own use.

“However, the caveat is that we should not rush to export our gas to Europe at the expense of our domestic and regional markets, no matter how tempting the prospects of earning foreign revenue,” Nkabane said.

“The argument often advanced is the lack of transmission infrastructure and unaffordability of gas products for local communities. My counter-argument is that we are not going to change this situation if we do not use the revenue earned from gas exports to develop … our economies to create employment opportunities that will lead to consumption of goods and services.”

Nkabane made these remarks as she called on African countries to increase oil and gas trade ties.

“South Africa imports the bulk of its crude requirements from African producers, including Nigeria and Angola.

“There is ample opportunity for a massive expansion of the gas trade, especially from the Gulf of Guinea and the broader West Coast of Africa, where we have many producers.

“As a region we should strive to build a strong oil and gas sector that will drive regional and continental economic development,”  said. – SAnews.gov.za

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