South Africa is potentially well endowed with oil and gas. The Petroleum Agency SA (PASA) estimates that the country holds 27 billion barrels (bbls) and 60 trillion cubic feet (tcf) of prospective oil and gas resources on the south, west, and east coasts.
The estimate for the onshore exceeds 200 tcf of prospective shale gas resources, biogenic gas, and coal bed methane.
The gas potential outlined above is very significant from a national energy security perspective. In fact, the PetroSA Gas to Liquids Refinery (GTL) in Mossel Bay, which produces petrol, diesel, jet fuel, paraffin, and liquefied petroleum gas (LPG) as the main products was sustained with 1.5 tcf of gas over 28 years from 1992 to 2020. Furthermore, the 865km gas import pipeline from Mozambique to the Sasol Secunda Gas-to-Liquids Refinery was built on the back of 3.5 tcf of discovered gas from the Pande and Temane fields. Those fields are still in production 18 years later, since first gas in 2004, and are expected to decline by 2026.
The 27 billion barrels of prospective oil resources estimated for South Africa are also very significant. By comparison, Angola has approximately 7 billion barrels of oil reserves and 10.5 trillion cubic feet of gas reserves. Angola’s oil production and supporting activities contribute about 50% to the country’s gross domestic product (GDP) and 89% to export earnings.
South Africa on the other hand is heavily dependent on imports in terms of crude oil, and refined petroleum products. Crude oil and refined petroleum products are the largest imported product category in South Africa. The country is spending some US$9.6 billion (~R150 billion) on the importation of crude oil and petroleum products per annum (representing some 15% of the country’s total imports). The importation of crude oil, gas, and petroleum products, therefore, has the largest negative impact on the country’s balance of payments and poses a risk to the country’s energy security and sovereignty.
NEAR DEVELOPMENT OIL & GAS PROJECTS
A number of natural gas discoveries on and offshore South Africa have already been made in South Africa recently and are near development. These include ~4 tcf gas and condensate discoveries in Block 11B/12B off the south coast by TotalEnergies and partners. TotalEnergies drilled two gas exploration wells in 2019 and 2020 in deepwater Block 11B/12B off the South Coast of South Africa, some 175km to Mossel Bay.
Some 400 billion cubic feet (bcf) of natural gas and helium have also been discovered by Tetra4, which is wholly owned by Renergen, in Virginia, near Welkom, Free State. Tetra 4 continued with the 2nd phase drilling campaign with at least 20 wells drilled in 2021 – 2022. Tetra4 also continued with the phased construction of the liquid Helium and liquefied natural gas (LNG) plant following the successful commissioning of the 1st phase in September 2022 and have started supplying LNG to the local market. South Africa starting exporting liquified Helium to the US in December 2022. The 2nd phase or scaling up of the Tetra4/Renergen project is underway. There are several other exploration activities in that region which is estimated to have high concentrations of Helium. Furthermore, there are at least 30 active exploration rights on and offshore South Africa in various stages of exploration. The 200 tcf shale gas potential in the Karoo remains untapped.
THE ROLE OF GAS IN THE JUST ENERGY TRANSITION
As stated above, South Africa has significant gas potential. According to the National Development Plan 20,000MW of baseload electricity could be generated from only 24 tcf of gas for at least 20 years. This is at least half of the current electricity-generating capacity in the country. Furthermore, gas burns cleaner than coal and oil, it emits at least 50% less carbon dioxide than coal and 30% less than oil, and without nitrogen and sulphur oxides. The exploration and exploitation of the country’s prospective gas resources could thus also aid the country’s transition towards net-zero carbon emissions by 2050.
The use of oil and gas in South Africa is consistent with the country’s decarbonisation strategy particularly as South Africa is a coal-based economy. The electricity supply infrastructure build programme of the country will be dominated by renewable energy technologies, but gas is still required to provide baseload and load following generation capacity. Gas fired generation plants also provide the much needed ancillary services to stabilise the electricity supply system.