South Africa’s oil and gas bonanza

DA shadow minister of Mineral Resources James Lorimer revealed details about South Africa’s untapped oil and gas treasure at the recent Biznews 10 Conference.

Lorimer said South Africa has a significant oil and gas industry under development which holds huge potential for the country.

“We could have a resource that will echo the great finds in the past, like the Kimberley diamonds field, the Witwatersrand goldfields, and the Witbank coalfields,” he said.

He said offshore gas and oil discoveries in the southern Namibian territorial waters, just kilometres away from South African territorial waters, give a good idea of what will be found in future.

South Africa is the closest landfall to the wells in Namibia, estimated to contain around 5 billion barrels of oil.

The wells are also in the same geological feature, the Orange Basin, which stretches all the way down the coast to the south of Cape Town.

“Serious geologists say there’s a very strong chance of finding oil all the way down the basin. That means in South African waters, in considerable quantities too,” he said.

Total has exploration rights in this area, stretching from Saldanha to far south of Cape Town, and they are confident they will find oil.

Rough expectations for the entire West Coast oil fields are around 10 billion barrels of oil and 50 trillion cubic feet of gas.

“Put another way, 1 trillion cubic feet of gas could create a thousand megawatts of electricity for 25 years,” Lorimer explained.

Moving to Mossel Bay, Total is obtaining production licences for discoveries estimated to contain reserves of 3 to 4 trillion cubic feet of gas and a billion barrels of oil.

Petroleum Agency of South Africa CEO Phindile Masangane said the development of the Southern Cape Field alone could contribute up to $457 million per year to government revenue.

South Africa also has impressive onshore gas resources. Renergen and Kinetico have been successful, with the latter drilling 40 holes and finding gas in every single one.

This gas is payable and relatively shallow. It has a potential life of 12 to 30 years, with another 5 trillion cubic feet expected.

The location of their resource is close to South Africa’s power-producing heartland, making it easy to transport and use.

Lorimer said the country also has large shale gas reserves. However, due to strong resistance to fracking, the commercial viability is still 6 to 7 years away.

Threats to making the most of these resources

James Lorimer
James Lorimer

Exploiting the potential of South Africa’s valuable oil and gas fields is threatened by two possible issues –

  • The government can mishandle the legislation again, as it did in 2014. The Upstream Petroleum Development Act is currently before Parliament, and its passage will be crucial.
  • Big Green – internationally funded anti-development groups that often challenge drilling or seismic applications.

Lorimer said South Africans must decide whether they want development or not. If so, the country’s development can be boosted by its mineral endowments, including fossil fuels.

“Renewable energy is with us to stay, but fossil fuels still have a major role to play in energy worldwide,” he said.

The demand for minerals for renewable energy is much greater than the current mining industry can supply.

There’s also concern about China’s global leadership in processing these minerals, leading to a need for diversification.

He said these oil and gas resources could help South Africa to have loads of cheap power in ten years.

“The world will be primarily powered by fossil fuels for a long time to come, and South Africa should seize its endowments to create a better future for our countrymen,” Lorimer said.


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