The Department of Mineral Resources and Energy (DMRE) will “sustainably continue to develop” South Africa’s oil and gas resources in order to ensure energy security and alleviate dependency on foreign oil.

This is according to Mineral Resources and Energy Deputy Minister, Dr Nobuhle Nkabane, who was speaking at the Southern Africa Oil Gas Conference on Wednesday.

“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,” she said.

The Deputy Minister said South Africa has already initiated policy intervention processes to boost the development and growth of the country’s oil and gas industry.

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

“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 de-coupling of the Upstream Petroleum Development Bill from MPRDA will bring regulatory certainty and hopefully shore up investor confidence,” Nkabane said.

Natural gas

Deputy Minister Nkabane highlighted that natural gas in one the key components in South Africa’s Integrated Resource Plan (IRP) 2019 and accounts for at least 3% of the country’s energy supply.

She explained that natural gas can also contribute to South Africa’s quest to lower emissions output.

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

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

She urged countries that have discovered gas to ensure these reserves not only serve international appetite but also contribute to energy security in local communities.

“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.

“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,” she said.

Nkabane also called on African countries to increase ties in oil and gas trade between themselves.

“Already, 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 gas trade, especially from the Gulf of Guinea and the broader West Coast of Africa, where we have many producers and some already exporting. We collaborate closely with the African Petroleum Producers Organisation and urge more meaningful engagement with this continental body.

“As a region we should strive to build a strong oil and gas sector that will drive regional and continental economic development as is the case with the advanced economies,” Nkabane said.