SA's economic future lies in oil and gas - Zwane

Johannesburg – South Africa’s petroleum resources sector is one of the focal points of the Mineral and Petroleum Resources Development Act (MPRDA), and its development will benefit the economy.

This is according to Mineral Resources Minister Mosebenzi Zwane, who addressed the third Deepwater East and Southern Africa Congress 2017 on Thursday. The focus of the congress was South African oil and gas law reform and the future upstream and offshore industry development.

“Our mineral resources are a major contributor towards our GDP, and we hope to augment this contribution with our petroleum resources, a relatively new sector in the South African context,” said Zwane.

He added exploration requires “patience and steady guidance” of regulations to achieve growth. This is tied to the finalisation of the MPRDA. “The bill, which is going through the Parliamentary processes at present, enhances provisions relating to petroleum development in order to secure a win-win mechanism as the process for development evolves,” he said.

“It is anticipated that this initiative will drive forward the development of petroleum resources,” said Zwane. This will filter through to become fiscal and socioeconomic benefits.

Currently there are over 300 exploration wells, which include drilled appraisal and production wells. The exploration has resulted in the discovery of “several small oil and gas fields”, and the commercial production of oil and gas from the Bredasdorp Basin, he said.

In the Pletmos Basin there are two undeveloped gas fields, and a further six gas discoveries and one oil and several gas discoveries have been made in the South African part of the Orange Basin, he explained.

Fracking: differing views

South Africa will be pursuing the exploration of shale gas resources in the Karoo basin. According to the United States Energy Information Administration, it is estimated to have 390 trillion cubic feet in unproven technically recoverable shale gas resources.

“It is expected that the development of this gas will contribute positively to our economy, in diversifying our energy mix and the development of other support industries,” said Zwane.

A moratorium has been established in the meantime to ensure exploration is undertaken responsibly, to account for the environmental, water and socio-economic impacts of the development.

The exploitation of shale gas resources can help the country reach its economic development goals sustainably, maintained Zwane.

READ: CSIR fracking report shows the downside

By contrast, research by the Council for Industrial and Scientific Research last year found that shale gas exploration in the Karoo would create only between 60 and 900 jobs.

The contribution to the local economy of shale gas exploration could be between R3.5bn and R28bn a year, City Press reported.

It will also add to government consumption expenditure for the payment of employees' salaries, the report revealed.

READ: Report shows how SA can boost shale gas development

A report by the World Energy Council in partnership with Accenture showed that even though South Africa has significant potential for shale gas development, little progress has been made in exploiting these resources, Fin24 reported.

“South Africa (which has the eighth biggest reserve of shale gas in the world) has the potential to become a major unconventional gas producer and should persevere despite the current low prices since gas is a long-term game,” World Energy Council secretary general Christoph Frei said in a statement.

The report advises South Africa to plan infrastructure and ensure water management is taken into account, build local expertise and provide financial incentives such as tax incentives.