Minister Gwede Mantashe: Investing in African Energy Conference

Remarks by the honourable Minister of Mineral and Petroleum Resources Mr Gwede Mantashe (MP) AOW: Investing in African Energy Conference 

Master of Ceremonies, Ms Lebo Lion
Your Excellencies, 
Ministers present here Deputy Minister of Mineral and Petroleum Resources, Mrs Judith Nemadzinga-Tshabalala
Captains of Industries Members of the Investment Community

Distinguished Guests

It is an honour and privilege that I welcome you to South Africa and to the 30th edition of the AOW: Investing in African Energy Conference. Despite the sustained geopolitical tensions that remain a serious threat to global energy security, we gather here at a time when energy markets have improved leading to the decrease of basic fuel prices for the fifth consecutive month, thereby cushioning consumers against the risingcost of living.

To make life more affordable for all South Africans, we have already begun with discussions about reducing administered prices, including the price of fuel and electricity. Included in the discussions of fuel prices, are discussions on, but not limited to, the general fuel and the Road Accident Fund (RAF) levies. We intend to conclude these discussions in the shortest possible time for the country to realise the three priorities of the government of national unity, namely:

• To drive inclusive economic growth and job creation
• To reduce poverty and tackle the high cost of living
• To build a capable, ethical, and developmental state

Notwithstanding the contending political ideologies in the government, we are clear that energy is a flywheel that will propel South Africa to realise these priorities. As we continue to pursue security of energy supply and address energy poverty, a diversified energy mix remains a requisite for our nation to meet its growing energy demands.

During the 6th administration, we sought to put an end to the polemic debate about energy sources and implored the energy industry, including organisers of the AOW and other energy conferences to deal with energy matters in a coordinated approach in one conference to enable delegates to talk about the energy sector comprehensively.

Whereas the AOW is rebranding to capture discussions on a broad spectrum of energy sources, there still remains a challenge of numerous energy conferences across the board that sustain the polemic debate about energy sources.

Although the consumption of crude oil broke through the 100 million barrels per day level in 2023, as quantified in the 73rd edition of the Energy Institute’s statistical review of the world energy, our experience over the past five years has proven to us that the petroleum sector has been running a second fiddle to other sources of energy, in particular the renewable energies.

In contrast to the sustained crusade on oil and gas development, the reconfiguration of the Department of Mineral Resources and Energy (DMRE) into two Departments allows us time and space to give a focused attention to the entire petroleum value.

As part of government concerted efforts to provide for the orderly development of the country’s petroleum resources, ensure equitable access, and promote the participation of the historically disadvantaged persons in the sector, the department developed the Upstream Petroleum Resources Development Bill which has since been adopted by both houses of Parliament and is ready for assent into law by the President. 

This is the first of its kind in the South African history as the Upstream Petroleum Industry has always been regulated as an appendage to other industries. We are convinced that once the bill is enacted into law, it will not only pave the way for an orderly development of the Upstream Petroleum Industry but will boost the country’s economic growth to 8% as is the case with Namibia which increased its potential to double its economy by 2040 on the back of its recent discoveries of oil and associate gas.

To ensure that South African’s enjoy maximum benefits from their national patrimony, their petroleum resources, we have established the South African National Petroleum Company (SANPC), as a state-owned entity to carry the state share in petroleum projects and exploit some resources in its own right. The South African National Petroleum Company (SANPC) Bill is undergoing cabinet processes ahead of its onward transmission to parliament for consideration and adoption. 

The enactment of the bill into law will enable the SANPC to operate as South Africa’s leading player in the petroleum industry, thereby ensuring energy security, foster partnerships, and propel economic growth on the back of petroleum resources.

Additionally, the Petroleum Products Amendment Bill (PPAB) is also undergoing cabinet processes for approval to publish for stakeholder comments. The bill seeks to; firstly, promote the transformation of the petroleum and liquid fuels sector by encouraging participation and equity, secondly, ensure that the persons involved in the manufacturing or sale of liquid fuels are regulated, and lastly, to ensure that the petroleum sector contributes to the country's economic development.

Notwithstanding the crusade against oil and gas development in South Africa, it is encouraging that over the last 10 years, the African continent has seen considerable interest in oil and gas blocks with major petroleum players making valuable investments in offshore basins through acquisition of new data.

In March this year, ENI’s exploration well Murene-1X in block CI-205 in Côte d'Ivoire discovered oil, gas and condensate, while Mozambique tripled its income from Liquified Natural Gas (LNG) sales in 2023 to reach USD 1.7 billion, and Uganda is set to issue new oil and gas exploration licenses in the 2025/26 fiscal year. 

In the past two years, TotalEnergies, Shell, and Galp have made eight discoveries across three blocks in Namibia’s Orange Basin,
representing an estimated 3.5 billion barrels of potentially recoverable oil. These discoveries have led to a huge interest by major petroleum companies since it is believed that the Namibian discoveries may be extending southwards into South Africa.

The discoveries of gas and condensate from two exploration wells drilled in Block 11B/12B offshore in the South Outeniqua Basin have also proven that South Africa`s under-explored deep waters have significant potential for oil and gas, and thereby signalling a need to accelerate exploration efforts.

Although TotalEnergies has announced their exit on the block, there remains a good potential for other oil and gas players to partner with the remaining operator – MainStreet - and develop the block. Contrary to the view that suggests that TotalEnergies withdrawal from the block is tantamount to lack of confidence, it is encouraging that the company is a major shareholder in 3 blocks North of South Africa’s Orange Basin in the deep to ultra-deep waters, and a 100% shareholder of another larger block that is 3 times the size of the 11b/12b in Southern Outeniqua.

Additionally, several exploration projects in the South African Orange Basin are now gearing up for development, including:

• Preparation work for drilling exploration of the Deep-Water Orange Basis (DWOB) block operated by TotalEnergies
• Proposed drilling of an exploration well, with the option to drill up to 4 additional wells in Block 3B/4B
• The Northern Cape Ultra-Deep-Water Block has started with environmental authorisation processes for drilling
• The notable progress made on Block 5/6/7 with a potential to start drilling exploration in the block in 2026 targeting large oil and gas resources Apart from drilling, major seismic exploration projects offshore are planned between 2025 and 2026, including multi-client surveys by CGG South Africa, TGS, and Searcher.

The main hindrance or risk to these projects being realised in South Africa, remains the unabated and frivolous litigation against the exploration and production of oil and gas by foreign-funded lobby groups and Non-Governmental Organisations (NGOs). 

This has already affected two major seismic surveys to date, including Shell which abandoned their survey and went on to discover oil and gas in Namibia, as well as ENI which after being taken to court 47 times, left and went to discover oil in huge quantities in Côte d'Ivoire.

The successful 3D seismic data acquisition in April this year by Searcher on South Africa’s west coast has proven that exploration of petroleum resources can be done successfully without any harm to the environment. Notwithstanding these challenges, there has also been a growth in the interest on onshore blocks most targeted for shallow unconventional coalbed methane plays and biogenic gas plays. 

Additionally, South Africa also has an exciting potential for shale gas plays hosted by the Karoo Basin with up to 209 Trillion Cubic Feet (tcf) of gas estimated for development. There are potential opportunities for long-term cheaper indigenous gas supply from the Karoo Basin that could contribute to South Africa’s growing energy needs and its economy.

As part of the government’s concerted efforts to establish an environmental baseline in the Karoo Basin that will assist in developing effective legislation to regulate the development of shale gas in the region, in August this year, we gazetted our intention to conduct a geophysical investigation across the region in relation to Petroleum Resources. 

The acquisition of more geophysical data will enable the Department to make informed decisions regarding the issuing of exploration rights in the area. To ensure that South Africa has an adequate supply of liquid fuels, the government has through the CEF concluded a transaction on the sale of assets at the SAPREF Precinct. 

This acquisition has since been approved by the Competition Commission, thus reinforcing our efforts that seek to guarantee sufficient supply of petroleum products in the period where a several refineries have been shut down prematurely. 

Like Chevron and Petronas, Shell’s decision to divest from its downstream business operations in South Africa provides an opportunity for another investor, or major oil company, to take over the assets as the downstream sector will remain attractive for the foreseeable future, given the rise of hybrid vehicles.

In closing, we appeal to the delegates at this conference and the investment community to continue investing the development of oil and gas to enable a prosperous energy outlook for Africa and promote sustainable development.

I thank you.