The recent gas condensate discovery by Total South Africa, 175 km off the southern coast of South Africa, has set the stage for a significant contribution to the nation’s economic development as it will assist in reducing dependency on imports of oil and gas, notwithstanding the considerable reserves believed to exist in its territorial soil and waters. The discovery will support the launch of a new hydrocarbons province in the country, which could benefit from the equivalent of billions of barrels of oil in South Africa’s oceans.
This discovery is believed to be a catalyst and motivation for policy makers to foster a business environment for further exploration and drilling endeavours in South Africa. This will consequently translate into benefits for South African workers and contractors across the value chain, creating employment opportunities for people far and wide. Additionally, it increases the South African government’s engagement with the African and global oil industry alike.
The gas discovery has come at an opportune time as the South African government is currently developing new legislation focused on separating oil and gas from traditional minerals. Furthermore, in accordance with the new Integrated Resource Plan (IRP 2018), the nation aspires to install an additional 8 100 MW of gas-to-power capacity in South Africa by 2030.
This breakthrough is expected to attract major oil companies in exploring the blocks they have already acquired, which will subsequently drive major new upstream oil activity offshore. Moreover, the discovery serves as an opportunity for the country’s oil industry to attract the necessary investment as both local and global investors seek sound leadership and governance in their investment destinations.
It therefore remains suffice to say, that following years of gloom, the outlook of the South African oil industry appears optimistic once again. Opportunities are boundless and now may be the time to capitalise on the Brulpadda breakthrough.
Africa is set to become a leading gas market and has the potential to become a significant market for the development of liquefied natural gas (LNG) with many African countries exploring the natural gas potential. There have been rapid developments in West Africa’s gas sector as seen from Senegal to Angola. Although significant gas discoveries in Mozambique, Kenya and Tanzania have caused a concurrent surge of gas in the regions, foreign and/or private investment is necessary if developments and infrastructure associated with these discoveries are to be realised. Africa’s shale-gas exploration has been triggered by the emergence of shale gas and the commissioning of the Strategic Environmental Assessment of Shale Gas by the South African Government. At the end of 2016, Africa was reported to have had proven natural gas reserves of 503.3 Tcf (trillion cubic feet), amounting to an increase of around 1% in total gas reserves on the continent.
Furthermore, with the global impetus for environmental awareness and sustainability, natural gas is considered a viable option as it is the most environmentally friendly fossil fuel. Moreover, it stands as the only fossil fuel with the potential to secure its share in the energy mix, increasing its carbon footprint by improving the economics of large-scale carbon capture and storage (CCS) for gas-fuelled power generation and reducing methane emissions. This vision will necessitate the support of and adherence to strict policies to decrease air pollution and greenhouse gas emissions.
The natural gas supply chain involves field treatment, and transportation of natural gas liquids is contingent on various factors including the composition of the produced hydrocarbon stream, proximity to end users, market conditions, and available infrastructure. Natural gas is an adaptable fuel, supplying 22% of the energy used globally. It constitutes almost a quarter of electricity generation, functions as a feedstock for industry, has fewer emissions of most types of air pollutants and carbon dioxide, all the while producing an equal amount of energy.
According to the International Energy Agency (IEA), the demand of natural gas will outpace oil and coal by 1.6% per year over the following five years. This growth will be accelerated by factors such as abundant supply, low prices, and its part in decreasing air pollution and other emissions.
Gas, the last of the fossil fuels to experience peak demand, is set to become the world’s key energy source towards 2050 owing to the availability of shale gas and the increase in the liquefied natural gas (LNG) trade.
It is predicted that global economies will increasingly become gas-based as they explore cost-effective solutions to create value from flared gas and evaluate innovative technologies that enable transportation of gas from remote offshore fields. This rise in gas consumption will lead to greater investment in both the short and long term across natural gas supply chains.
Independent power producers (IPPs) are constantly discerning means to exploit opportunities to enter the African market. Their gas-fired power alternatives are consistent with the expected overall growth agenda for a lower carbon future as gas is predicted to be used as a bridging fuel as the sector transitions to more sustainable solutions.
Many also feel confident that with increased gas usage, there will consequently be a decline in flaring in Africa as additional facilities provide substitute uses for the gas.