A lot has changed in the past year. One thing that has remained constant is the state of stasis of South Africa’s new petroleum code.
Earlier this month, Africa Intelligence reported (https://bit.ly/3pn2MzH) in a headline: ‘Total makes development of block 11B/12B conditional on publication of Petroleum Bill." The statement once again brings into focus South Africa’s need to create dedicated petroleum legislation, and the country’s lack of a clear position on natural gas.
Brulpadda and the New Petroleum Code
Total first tried to drill the Brulpadda prospect in 2014, and was held back by difficult deepwater conditions. In
Currently, oil and gas activities in
As the bill reached the community consultation stage in 2020, the pandemic struck, freezing the progress of the legislation. However, in a statement to AOP on 25 January, the DMRE said: "The Department has concluded consultations with interested and affected parties and will be processing the Bill for onward transmission to
"Finalization of the bill will unlock the country’s untapped potential in the upstream oil and gas reserves," Minister Mantashe told a joint sitting of South Africa’s parliament (https://bit.ly/3cbyQ69) in October.
South Africa’s Energy Transition — From Planning to Action
Total’s natural gas discoveries present
The Integrated Resource Plan (IRP) of 2019, the official road map for South Africa’s energy sector development, says (https://bit.ly/3t8b555): "While in the short term the opportunity is to pursue gas import options, local and regional gas resources will allow for scaling up within manageable risk levels. Exploration to assess the magnitude of local recoverable shale and coastal gas are being pursued and must be accelerated."
It continues: "There is enormous potential and opportunity in this respect and the Brulpadda gas resource discovery in the
But despite stating that exploration "must be accelerated" and that in the short term "the opportunity is to pursue gas import options [via LNG and pipeline]" — thereby presenting two critical avenues for South African energy sector growth — the private sector awaits action from government so it can get to work.
The DMRE told AOP: "We are committed to promot[ing] greater exploration in minerals and upstream petroleum activities." Plans are in place for gas development: While the upstream petroleum bill makes its way through parliament, the Independent Power Producers’ Office under the DMRE is advancing the LNG to Power IPP Program (https://bit.ly/2NFkuAJ)
to promote production of up to 3,000 MW of power from gas. But the lack of upstream legislation and a clear overall gas strategy is holding back any major project.
"From an investor’s perspective, [Total’s alleged pressure on government] is a rational move and it should give politicians a wake-up call," said
"Total was willing to stick their neck out and take the risk in terms of exploration. They have been rewarded for that through two huge finds as a result of their exploration activity. Government now has to come to the party. Clarity is needed in terms of legislation for further investment. They cannot expect investors to put in resources if there is no legislative certainty."
It’s time for the planning to conclude, and the work to begin.
Time to Become Attractive
The pandemic cannot hold back South Africa’s need to create jobs and put the economy on a path to growth — in fact, the COVID-19 crisis has made growth and upskilling of South Africans more important than ever. Building a diverse energy industry, in which natural gas plays a major part, could establish
"Every oil- and gas-producing country faces challenges now, and
"This is the right time for
"Drafts of the petroleum bill have been released — the conclusion of the bill was said to be imminent, but where is it now?"
Commercializing Brulpadda and Luiperd will be challenging and, if the project is deemed viable by the operator and government, would take at least five years (https://bit.ly/2MsoUKy). That’s why action is needed now: This is an opportunity that
Total declined to provide comment for this story, and the DMRE states it is "not aware of the comments apportioned to Total." It further stated: "There are no specific discussions with IOCs except for normal ongoing consultations with all industry stakeholders we do on an ongoing basis."
The national vision for natural gas and upstream exploration and production is not yet known, despite the publication of the IRP. For a strong post-COVID recovery and to put foundations in place for decades of sustainable growth, it must become clear in 2021.
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