Total’s discovery of gas in Outeniqua, an offshore basin in South Africa marks the first step for exploiting its hydrocarbon’s potential. The discovery, which will help open a new hydrocarbons province in South Africa, could be evidence of the presence of billions of barrels of oil equivalent in South African waters, which will without a doubt change the course of the country’s economy and help reduce dependency on imports.
In a country that imports 416,000 barrels per day of condensate crude oil, the gas discovery will have a big impact on the importation of gas and oil.
Estimations by Total-a multinational gas and oil company- indicate that the Brulpadda field, where the gas was found, could contain about 1 billion barrels equivalent of oil; enough to change South Africa’s economy. Based on calculations from the South African Oil and Gas Alliance, the gas could fetch over USD 73 billion for the South African economy over 20 years.
Regulatory uncertainity has been a major barrier to the development of the oil and gas industry in Africa despite increase in their demand. However, governments are acknowledging that to attract investment in the industry, they have to adjust their frameworks to balance risk and reward.
With South Africa working on a legislation to separate oil and gas from traditional minerals and its ambitious Integrated Resource Plan (IRP 2018) that seeks to install an additional 8,100MW of gas-to-power capacity in South Africa by 2030; the gas discovery is a timely venture.
“The oil industry hopes this will be a catalyst and encouragement for all policy makers to work on an enabling business environment for exploration and drilling activities in South Africa,” declared NJ Ayuk, executive chairman at the African Energy Chamber (AEC).
“Oil companies want to see leadership and sound governance wherever they invest,” added Ayuk. “With South Africa demonstrating a commitment to reforms and the creation of an enabling environment for business, the oil industry is confident that the country can attract the investment needed.”
The executive chairman further noted that South Africa holds much more potential for similar discoveries and that it was time to have a meaningful conversation on local content development to ensure that the industry benefits all South African workers and contractors across the value chain as well as creating jobs for the communities.
Africa holds eight percent of the world’s oil and gas reserves, a majority of which are vastly underexplored and underexploited. South Africa is among other 19 African countries exploring its hydrocarbon potential.