According to Bloomberg, Energy Minister Gwede Mantashe in a speech to parliament in Cape Town, said, “We need to speedily work to entrench regulatory and policy certainty,” 

“The department has begun with the process of developing a Petroleum Resources Development Bill.”

It appears that South Africa passing a separate bill for oil and gas industry is extremely important, especially after Total SA announced its first deepwater oil discovery off the coast of South Africa, Bloomberg said. 

After the discovery, Total SA opened up a new oil and gas province in the region. Kevin McLachlan, senior vice president of exploration at Total announced that the Brulpadda discovery was drilled in a ‘challenging deep-water environment’. 

The Brulpadda well is located off the shore of Mossel Bay, which is recognised as a highly potential exploration site for the company.

The new policy will in fact secure the industry from any kind of uncertaining in the mining sector, which is largely suppressed owing to several debates over government’s new laws focused on redistributing the country’s mineral wealth. 

Mantashe said that the bill will be passed in hope to ensure ‘regulatory certainty to the upstream petroleum industry’ and boost its development in the future.

Currently, South Africa imports 60 percent of oil commodities in the form of crude. The crude is then processed at local refineries. 

South Africa is planning to establish itself as an energy hub and a key market player in the sub-Saharan African region.

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“However, despite the positive statements regarding the potential resource size of up to 1 billion barrels of oil equivalent in this discovery and the four nearby prospects, previous upstream projects in South Africa have been technically challenging to develop. The geology in the area is very complex and it is in a harsh deep water environment. Projects such as Ikhwezi and Ibhubesi have undergone delays and reserve write-downs due to these difficulties.

“Offshore production of gas is supplied to the Mossel Bay GTL refinery, which is one of the primary revenue generators for PetroSA. Over the past few years it has struggled to source the necessary gas to continue operations and has been using more costly condensate imports. With existing gassources declining rapidly, additional supply of around 200-300 million cubic feet per day (mmcfd) by the early 2020’s is required to continue operations at the refinery. Natural gas is also used in other synfuel plants manufacturing and power generation, although most of the gas turbine power plants, with total capacity for 300-350 mmcfd, are running on liquid fuels due to lack of gas supply.

“The Brulpadda discovery could have a similar impact on South Africa as the Zohr discovery did in Egypt. At the time of the Zohr discovery, Egypt was starting to plan for a future where the domestic gas production would not be enough to keep up with local demand for gas. Currently South Africa imports gas from Mozambique and plans have been suggested for up to three new LNG regasification facilities to allow more imports into the country. Compared to other nearby gas discoveries that face significant delays, such as the Kudu development in Namibia or the giant fields in Mozambique and Tanzania, Brulpadda would be able to tap into a pre-existing local market where the infrastructure and demand is already present.”

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