Gauteng Business 2020/21 edition

a key
As stated in the National Development Plan (NDP), the government’s intention
is to “enable exploratory drilling to identify economically recoverable
coal seam and shale gas reserves, while environmental investigations will
continue to ascertain whether sustainable exploitation of these resources
is possible: “If gas reserves are proven and environmental concerns
player
alleviated, then development of these resources and gas-to power projects
should be fast-tracked.” The plan also calls for the need to incorporate a
greater share of gas in South Africa’s energy mix, through importing liquefied
natural gas (LNG), using shale gas if reserves prove commercial, and
developing infrastructure
for the import of
n a vital sector
LNG, mainly for power
production, over the
short to medium term.
South Africa’s oil and
gas exploration and
production sector offers
an excellent investment
Petroleum Agency SA plays an important role in developing South Africa’s gas
market by attracting qualified and competent companies to explore for gas in
the country, as well as monitoring and regulating their activities. In addition
to ensuring operators always comply with the law, a major area of focus is
increasing the inclusion of historically disadvantaged South African-owned
entities in the upstream industry. South Africa needs large discoveries of indigenous
gas as well as fair access to opportunities and social licence to develop
a healthy gas market.
Currently, natural gas supplies about just 3% of South Africa’s primary energy.
A significant challenge facing the development of a major gas market in South
Africa is the extreme dominance of coal as
a primary energy source, and industry’s historic
reliance on coal-generated electricity.
A lack of extensive gas transport and reticulation
infrastructure goes hand in hand
with this, while other challenges include
uncertainty about volumes of indigenous
gas available to industry; security of supply;
switching and conversion costs; gas pricing;
and negativity around the ongoing use of
fossil fuels. End users require certainty before
committing, while explorers look for a
guaranteed market. On a more positive note,
opportunities for gas lie in the realisation
of South Africa’s NDP and the Integrated