Africa: South Africa’s Potential for Oil and Gas ‘Significant’

Mineral and Petroleum Resources Minister Gwede Mantashe says the discovery of gas and condensate from two exploration wells in the South Outeniqua Basin are proof that South Africa’s underexplored deep waters have significant potential for oil and gas.

The Minister was speaking during Africa Oil Week held at the Cape Town International Convention Centre.

“In the past two years, TotalEnergies, Shell and Galp have made eight discoveries across three blocks in Namibia’s Orange Basin, representing an estimated 3.5 billion barrels of potentially recoverable oil.

“These discoveries have led to a huge interest by major petroleum companies since it is believed that the Namibian discoveries may be extending southwards into South Africa.

“The discoveries of gas and condensate from two exploration wells drilled in Block 11B/12B offshore in the South Outeniqua Basin have also proven that South Africa’s under-explored deep waters have significant potential for oil and gas, and thereby signalling a need to accelerate exploration efforts,” Mantashe said.

Commenting on the withdrawal of international energy giant, TotalEnergies, from offshore Block 11B/12B and 5/6/7, Mantashe insisted that development on the block still remains viable.

“[There] remains a good potential for other oil and gas players to partner with the remaining operator – MainStreet – and develop the block.

“Contrary to the view that suggests that TotalEnergies withdrawal from the block is tantamount to lack of confidence, it is encouraging that the company is a major shareholder in 3 blocks North of South Africa’s Orange Basin in the deep to ultra-deep waters, and a 100% shareholder of another larger block that is 3 times the size of the 11b/12b in Southern Outeniqua,” he said.

According to the Minister, several exploration projects in the South African Orange Basin are “gearing up for development”. These include:

· Preparation work for drilling exploration of the Deep-Water Orange Basis (DWOB) block operated by TotalEnergies.

· Proposed drilling of an exploration well, with the option to drill up to four additional wells in Block 3B/4B.

· The Northern Cape Ultra-Deep-Water Block has started with environmental authorisation processes for drilling.

· The notable progress made on Block 5/6/7 with a potential to start drilling exploration in the block in 2026 targeting large oil and gas resources.

Mantashe said the risk for these projects is litigation against exploration and production.

“This has already affected two major seismic surveys to date, including Shell, which abandoned their survey and went on to discover oil and gas in Namibia, as well as ENI, which after being taken to court 47 times, left and went to discover oil in huge quantities in Côte d’Ivoire.

“The successful 3D seismic data acquisition in April this year by Searcher on South Africa’s west coast has proven that exploration of petroleum resources can be done successfully without any harm to the environment,” he highlighted.

The Minister gave a nod to the approval, by the Competition Commission, of government’s acquisition of the various assets that comprise the SAPREF [a joint venture between Shell Refining SA and BP Southern Africa] refinery, which is located in Durban.

“Government has, through the Central Energy Fund (CEF), concluded a transaction on the sale of assets at the SAPREF precinct. This acquisition has since been approved by the Competition Commission, thus reinforcing our efforts that seek to guarantee sufficient supply of petroleum products in the period where several refineries have been shut down prematurely.

“Like Chevron and Petronas, Shell’s decision to divest from its downstream business operations in South Africa provides an opportunity for another investor, or major oil company, to take over the assets as the downstream sector will remain attractive for the foreseeable future, given the rise of hybrid vehicles.

“We appeal to the delegates at this conference and the investment community to continue investing in the development of oil and gas to enable a prosperous energy outlook for Africa, and promote sustainable development,” Mantashe said.