Blue Chip Issue 85

BLUE
CHIP
OIL AND GAS
Good news
for the
South African
economy
Petroleum Agency South
Africa is enabling oil and
gas discoveries to kickstart
investment and growth.
Massive new gas finds off the coast of South Africa
and the positive interest shown by international
investors in the oil and gas sector have brought
good news for country’s citizens.
In the shadow of loadshedding and global energy price
spikes brought on by domestic state capture and Russia’s war
on Ukraine respectively, South Africans can be pleased that
new resources are being found nearby and there is a plan to
use them effectively.
The economic effect of the most recent finds off the coast
of Mossel Bay alone will be significant if they are marshalled
in a coordinated manner (see box).
New certainty in the regulatory environment and hard work
by Petroleum Agency South Africa (PASA), the agency which
evaluates, promotes and regulates oil and gas production
in the country, has seen increased interest in South Africa’s
potential as a destination for investment dollars.
The fact that TotalEnergies was willing to bring an expensive
oil exploration rig all the way to Mossel Bay from Norway more
than once is an indicator of the seriousness with which this
oil major is treating the South African project. TotalEnergies
is a 45% shareholder alongside Qatar Petroleum (25%),
CNR international (20%) and Main Street, a South African
consortium (10%).
Actually drilling the gas and delivering it via a pipeline to
PetroSA (the national oil company which runs Mossgas) and
Eskom (the national utility) will cost a lot more money, and
that is where several subsectors within the national economy
will benefit the most. In effect, the decision to go ahead and
commercialise the gas find will create a new market for gas in
South Africa.
The massive resources of natural gas that Renergen has been
working on for the last few years reached commercial production
in October 2022 in the northern Free State. Renergen, through
its subsidiary Tetra4, is the only holder of an onshore petroleum
production licence issued by the Department of Mineral Resources
and Energy through the PASA. The production rights area covers
187 000 hectares around the towns of Welkom, Virginia and
Theunissen.
Liquid natural gas for the domestic market and helium
for export from this project will create an entirely
new stream of energy options.
Most offshore exploration interest tends to
come from foreign investors because of the high
costs but within South Africa, there is a growing
number of local participants.
A women- and black-owned company,
Imbokodo, is making a name for itself as a
participant as a shareholder in a number
of licensing rounds.
False narrative
“I wish that as South Africans we can have a
holistic debate around our energy mix,” says Dr
Phindile Masangane, CEO of Petroleum Agency
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