INTERVIEW PASA exploring
INTERVIEW PASA exploring South Africa’s MANY PROSPECTS Dr Phindile Masangane joins Petroleum Agency South Africa (PASA) as Chief Executive Officer at a time when the country is developing a domestic gas market anchored on indigenous gas production. This is something that she looks forward to and can draw on her experience to contribute towards achieving. Please tell us about the history of Petroleum Agency SA. Petroleum Agency SA (PASA) has its roots in the Petroleum Licensing Unit of the then national oil company, Soekor (the predecessor of PetroSA). In 1999, following the Norwegian model, it was decided that regulation of the oil and gas upstream industry should be separated from the national oil company, and the Agency was formed through a ministerial directive. The Agency has successfully attracted major explorers to South Africa and facilitated the acquisition of many new large seismic surveys and some exploratory drilling, through a period affected by legislative issues and a major oil price crash. The company has grown from an organisation of about 25 staff members to 85 today and is held in very high regard by the local and international oil and gas industry that it serves. Currently, the Agency is actively involved in shaping the new stand-alone upstream legislation and in guiding government with its decisions regarding the possible exploration for shale gas. What is PASA’s core business function? PASA has three main functions, as follows. The first is to attract investment to South Africa’s oil and gas upstream industry, in other words, investment into exploration and production of oil and gas in South Africa. We have a team of geologists and geophysicists who interpret data gathered through past exploration activity to determine prospectivity, and use this to attract exploration companies to South Africa. The second function of PASA is to regulate the upstream industry in terms of the Mineral and Petroleum Resources Development Act, its regulations and other applicable legislation. The Agency has staff responsible for ensuring legal, technical and environmental compliance as organisations enter into contracts with the state to explore for oil and gas. The third function is to act as the national archive for all data and information produced during oil and gas exploration and production in South Africa and to curate and maintain this data for use and distribution. Other functions include advising the government on any issues pertaining to oil and gas as well as carrying out any special projects, as directed by the government. What is PASA’s purpose in South Africa’s energy sector? From the above, it is clear that the Agency is the regulator for South Africa’s oil and gas upstream industry. However, the Agency by no means sees its role as only reactive. On the contrary, it is one that is proactive and the Agency’s purpose is to facilitate and regulate oil and gas exploration to achieve production of indigenous oil and gas. This will ensure energy security and bolster economic growth, and play a strong role in addressing the eradication of poverty in South Africa. South Africa has committed to reducing its carbon footprint and natural gas can play a role in this. South Africa is currently heavily dependent on coal as a primary energy source and the substitution of natural gas for some percentage of electricity generation, as envisaged in the National Development Plan, could assist with South Africa reaching its goals in terms of carbon emissions. The Agency’s main role in this is to attract and facilitate the activities of explorers for indigenous gas. You have recently taken over the position as CEO of PASA – and you are the first formally appointed female CEO. Can you please share with us some of your ideas in terms of plans and strategies for growing and improving PASA. South Africa has a very good petroleum resource potential which remains unexplored. Before 1994, we didn’t have international oil companies in the country due to political sanctions. So all the exploration activities for oil and gas in South Africa were undertaken by the then state-owned company, Soekor (pre-cursor of PetroSA). Oil and gas exploration is a highly capital intensive and high-risk business that cannot be left to a national oil 12 | www.opportunityonline.co.za
INTERVIEW company to do alone. In the democratic era, we have attracted a number of international oil and gas companies including the majors like Shell, Total and ExxonMobil and have seen a number of our blocks being licensed. Significant exploration activity in terms of 2D and 3D seismic data collection has taken place since then, mainly by international oil companies. We are at the stage where we need to enter the next phase in terms of exploration – that of significant drilling activities. This is what we need: a move to proving the resources we have. That would be the game-changer for South Africa’s upstream oil and gas industry. The recent discovery by Total and its JV partners in Block 11B/12B (Brulpadda) is the first giant step in that direction. Offshore, there is currently ongoing exploration of the prospects close to the Brulpadda discovery. Odfjell’s Deepsea Stavanger oil rig is on its way to South Africa from Norway, and should arrive around the 12th of August. It will drill the Luiperd (more correctly the Luiperdpadda) prospect which is the second of five prospects in the group. There is an option to retain the rig in South Africa for further drilling. The Brulpadda well discovered light oil and gas condensate, but the phase in the other prospects can only be determined through drilling. Future development of the discovery is highly dependent on the success of this further drilling. Possible development could see gas condensate being piped to the PetroSA facility in Mossel Bay, but these decisions are ultimately up to the operator, Total, and its partners. My role is to work with industry and the department to fast-track these developments including finalising the Upstream Resource Development Bill. As we enter this phase in our industrial development, we want to ensure that it is an inclusive and diversified industry in terms of race, gender and participation of SMEs. What would you consider to be PASA’s biggest challenge/s ahead? South Africa is playing catch-up in terms of upstream oil and gas development compared to other countries in the region. With the correct policies, fiscus proposition and domestic industry off-take opportunities we can win. PASA’s challenge is to ensure that both international and local energy companies see this value proposition with South Africa and choose our country. In this low oil and gas price environment, companies are inclined to cut back on capital investments and we need to partner with them to sustain the momentum. Upstream oil and gas industry is highly capital intensive, high risk in the early stages and requires highly specialised skills. So local small and medium companies tend to find it difficult to source funding for participating in the industry. Our challenge is that as a regulator acting on behalf of the government and the people of South Africa, we have to find solutions to these challenges so that South African companies can meaningfully participate in this strategic industry. What do you predict the company’s biggest success will be in the future? A vibrant upstream oil and gas industry that contributes to the security of energy supply of the country and the economy having a substantially reduced dependence on imported gas. Dr Phindile Masangane, CEO of PASA DR PHINDILE C MASANGANE PHD CHEMISTRY, MBA, BSC. (MATHEMATICS & CHEMISTRY) Dr Masangane was appointed as the CEO of the South African upstream oil and gas regulatory authority, Petroleum Agency South Africa, in May 2020. Before then, Dr Masangane was an executive at the South African state-owned energy company, CEF (SOC) Ltd, which is the holding company of PASA. Dr Masangane was responsible for clean, renewable and alternative energy projects. In partnership with private companies, she led the development of energy projects including the deal structuring, project economic modelling and financing on behalf of the CEF Group of Companies. Her responsibilities also include supporting the national government in developing energy policy and regulations for diversifying the country’s energy mix. In 2019, Dr Masangane was Head of Strategy for the CEF Group of Companies where she led the development of the Group’s longterm strategic plan, Vision 2040+ as well as the Group’s gas strategy. From 2010 to 2013, Dr Masangane was a partner and director at KPMG, responsible for the Energy Advisory Division. In this capacity, she successfully led the capital raising of -billion for the Zimbabwe power utility, ZESA/ZPC’s hydro and coal power plants expansion programmes.
