‘SA can become an oil and gas exporter’ – CEF chair

South Africans tend to undervalue the country’s oil and gas resources, but investment in the development of these resources may amount to more than R200 billion in the next three to four years.

The environment is however extremely litigious, which hampers the development of the resources that could be the game-changer the country needs to resolve its energy crisis and kickstart economic growth to address poverty, says Central Energy Fund (CEF) chair Ayanda Noah.

Read: Government wants oil and gas exploration accelerated

She says the critical Upstream Petroleum Resources Development Bill that has already been approved by the parliamentary portfolio committee for mineral resources and energy will bring regulatory certainty and limit the amount of litigation.

The bill is aimed at the orderly development of the country’s petroleum resources.

The portfolio committee has completed public consultations in all provinces, and Noah hopes the bill will be finalised next year.

The country also needs more refinery capacity since the PetroSA facility in Mossel Bay is currently standing idle. However she hopes a partnership for the refurbishment of the refinery will be announced before the end of the financial year. That will enable the recommissioning within two years.

Noah, a professional engineer with decades of experience in the energy sector, has been mentioned as one of the candidates to possibly take on the Eskom CEO position.

She says gas has been classified as an appropriate resource in the just energy transition, and the recent discovery of 4.9 trillion cubic feet (tcf) of gas by Kinetiko Energy near Secunda is significant for at least three of Eskom’s coal-fired power stations in Mpumalanga.

Read/listen:
Eskom leadership vacuum may deepen
Environmental concerns nullified in massive SA gas find
Kinetiko Energy’s gas find a big boon for energy-hungry SA
Update: Kinetiko Energy makes huge gas discovery near Secunda

The find is near the Rompco pipeline, which transports gas from Mozambique to Sasol’s Secunda plant. The pipeline also runs close to the power stations and can be used to transport gas to for those operations to use instead of coal. The CEF has an interest in the pipeline through its subsidiary, EGoli Gas.

Noah says she has seen how the Chinese have converted old coal-fired power stations to use gas instead.

They basically demolish the existing plant and build a new one from scratch. In China this was done at a 1 800MW plant in 18-24 months “and that was during Covid”. “Now it can happen even faster”

She says as an engineer she knows renewable energy such as solar and wind power cannot provide baseload and gas is needed to stabilise the system, together with nuclear and clean coal.

Read: China’s plan to fix SA’s logistics and energy crises

According to the Petroleum Agency of South Africa, also a subsidiary of the CEF, the country has resources totalling 27 billion barrels (bbl) of oil and 60 tcf of gas offshore and a further 200 tcf onshore, including shale gas.

For a sense of scale, Noah says Mossgas produced 46 000 barrels per day and was in operation for 28 years on the back of a resource of 1.5 tcf. It produced petrol, diesel, jet fuel, paraffin and liquified petroleum gas (LPG).

It is important to note that the Pande and Temane gas fields in Mozambique – which have supplied Sasol’s Secunda plant and other users in South Africa since 2004 – prompted the construction of the 865km long Rompco pipeline on the back of the 3.5 tcf find. It is however expected to be depleted in another three years.

About 20 000MW of generation capacity (almost half of Eskom’s total capacity) requires 24 tcf of gas.

Read: Mozambique’s vast gas fields will fuel growth, says Grindrod

“Gas to power is a massive opportunity, as is producing our own petroleum products,” says Noah.

Import risks

Although all the attention is on the electricity crisis at the moment, the country is also running a huge risk regarding oil and gas. “We import almost everything”, which exposes the country to geopoliticial risks.

Noah says SA developing its own resources will also improve the balance of payments and create much-needed jobs.

“While the exploration and development of oil and gas resources requires massive amounts of money, the benefits are so big that it makes sense to consider partnerships. The resources are available, and it will further climate change goals.

“There are many potential partners,” she says, including from Arab countries and current and future Brics partners.

Read:
Six countries to join Brics
An expanded Brics could reset world politics
Brics bank to expand membership as Saudi Arabia looks to join

Noah says the viability of a new refinery on the Cape West Coast has been confirmed by the discovery of 11 bbl of oil in the Orange River basin in Namibian waters. It borders on South African waters within the same geological structure and bodes well for similar finds on this side of the border.

These finds can underpin the development of a new refinery on the West Coast which will reduce South Africa’s dependence on imports, and give it more control over prices.

Noah says the 3 tcf Total gas field in the sea near Mossel Bay could be in operation in the next three to four years.

Based on the available resources, South Africa may even in future export petroleum products to the rest of the continent, she adds.

Read:
Africa’s newest oil jackpot comes with a corruption curse
Namibia plans $2.1bn port expansion for oil developments
TotalEnergies CEO says Namibia oil discovery could be a ‘giant’