South African Business 2023

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• expanding black participation
• promoting local employment and skills
development
• creating an enabling environment to accelerate
exploration and production of South Africa’s
petroleum resources.
Sustainable development: balancing development
with environmental protection
South Africa has vast gas and oil resources and
exploration and the exploitation of these resources
has barely scratched the surface. Having to import
oil and gas has a serious impact on the country’s
balance of payments.
This makes it more difficult to industrialise the
country. For the 2021/22 financial year about 50
applications for exploration and production were
received but only about 10% of that number
were approved.
This is because of very stringent licensing and
environmental regulations which must be followed.
As PASA CEO Dr Phindile Masangane explains, “We
assure South Africans that the slow pace is because
we have to make sure that we have a robust
system that incorporates all the aspects of licensing
but importantly, that the environmental impact
assessment is thoroughly undertaken.”
Despite this, planned seismic surveys were halted
after opponents of the process went to court in 2021
and 2022. Proponents of continued exploration
argue that the seismic process being followed is no
different to that which has been followed in the past,
and which is employed all over the world.
Dr Masangane told Bloomberg in August 2022:
“As the Petroleum Agency, we acknowledge that
South Africa’s upstream oil and gas industry has
become litigious.” She noted that local consultation
standards are going to be evaluated and improved
if necessary. This aspect of the process has been the
subject of criticism in the court cases.
Investors are still very interested in the South
African proposition, as the TotalEnergies offshore and
the Free State project prove. Most offshore project
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.
Revised draft regulations related to hydraulic
fracking in the gas-rich Karoo region were
published by the Department of Forestry, Fisheries
and the Environment (DFFE) in July 2022 for public
comment. Fracking is a drilling technique that
is widely used in other jurisdictions such as the
United States, but environmental concerns have
been raised. Dr Masangane further told Bloomberg
that groundwater and geological studies are
being conducted in the biodiversity-rich areas of
the Karoo and that once regulations have been
finalised, seismic activity will be undertaken to
establish which blocks to license.
As part of an attempt to engage in a broader
discussion on policy issues, a joint colloquium was
held in 2022 on the subject of how to balance South
Africa’s energy needs with the country’s climate
change commitments. The colloquium, and several
online events which prepared for and anticipated
the main event, was jointly hosted by the DMRE, the
DFFE and PASA.
Dr Masangane is convinced that a balance
can be achieved between developing renewables
and continuing to exploit the country’s (and the
continent’s) oil and gas reserves. She points out
that the use of certain fuels for cooking leads to
deforestation: “If they were to use gas, whether
it is LPG or natural gas for cooking that in itself
is decarbonisation because then you arrest the
negative impact of deforestation. We must not buy
into a false narrative and a false choice. It is possible
that we can have a dual strategy.” ■
17 SOUTH AFRICAN BUSINESS 2023