Total Exploration and Production Southern Africa, a mining company affiliated with Total, the famous French oil marketer, recently announced a major offshore gas discovery that has sparked a certain level of uncertainty among industry players. The South African find has also sparked interest among stakeholders, including the country’s government and a number of energy sector investors.
However, Zwelakhe Gila, Head of Commodities at the African Energy Chamber, warns that the discovery comes at a time when South Africa’s policy makers are struggling to diversify the country’s energy mix, Total Exploration and Production Southern Africa recently announced a major offshore gas discovery.
”The Brulpadda well off the shore of Mossel Bay is one of a number of highly anticipated exploration prospects in South Africa,” Gila explained in a recent address.
“First reports of the field indicate that it holds between 500 million to over 1 billion barrels of oil equivalent. In comparison, neighbouring Mozambique’s 2012 discovery held over 350 billion barrels of oil equivalent,” he said.
“Those familiar with the history of Africa’s energy sector, and even those that aren’t, rejoice with a faint concern of what has been the outcome for many other resource abundant countries on the continent,” Gila continued.
He noted that while Total’s finding alone is not enough to eclipse the plethora of other resources in South Africa, it does find the country at a weak moment of energy policy and, more importantly, energy security.
With this in mind, South Africa’s Integrated Resources Plan (IRP), a strategy that covers the 2010 to 2030 period, was reviewed only once since its release in 2011. The 2018 IRP draft, which is yet to be approved, expects to see 8,100 megawatts (MW) of additional gas-to-power capacity set up by 2030.
“This further justifies the need for adequate and timely gas regulatory policy and balanced local content regulations to avoid squandering an opportunity to catapult South Africa into a booming African energy frontier,” Gila elaborated
He stated that this crucial need is further highlighted considering that month’s prior to Total’s discovery, Minister of Mineral Resources Gwede Mantashe halted all applications for oil and gas exploration in order to change its licensing process.
The move notably saw major stakeholder, Royal Dutch Shell relinquish a license to search for oil off South Africa, citing legislative uncertainty.
“Uncertainty does indeed prevail across South Africa’s oil & gas licensing and regulation,” said Gila.
He warned that “careless expedience to reopen the licensing process given the inevitable interest that follows such a discovery could still ultimately be detrimental to the country’s benefit from possible reserves.”