Newly discovered oil reserves could transform the South African economy

13 February 2019 Consultancy.co.za

As South Africa struggles to find the right formula to drive its economic growth, the country’s growth prospects have just received a major boost through the discovery of substantial natural gas deposits off its shore. Wood MacKenzie believes the discovery could be a “game-changer.”

 Much like many other African countries, the South African economy has been disproportionately dependent on the oil and commodity trade, which has spelled trouble for the country since 2014 when global oil and commodity prices took a tumble. The country has been struggling ever since.

Diversification and innovation have been the mantras for the country, in addition to the new President’s elaborate plans to draw foreign investment in excess of $100 million to the country. Nevertheless, a new development has indicated that the pressure to diversify might just have eased considerably.

Exploratory drilling off the coast of South Africa has revealed reserves of natural gas and condensate. The discovery was made by France-based global oil conglomerate Total, which characterised the reserve as at par with world class reserves as one that could kickstart a substantial oil and gas trade.

Newly discovered oil reserves could transform the South African economy

Specifically, the firm placed the size of the reserves at approximately 1 billion barrels of oil and gas as well as other condensate material. The discovery has already drawn international attention, including from Qatar Petroleum, CNR International and South African firm Main Street.

According to experts at oil and gas consultancy Wood MacKenzie, the new discovery could be the impetus that South Africa needed, particularly as the country still continues to import oil and gas to meet its substantial energy needs. Reduced reliance on imports could make room for significant economic growth.

Vice President for Global Exploration at Wood MacKenzie Andrew Latham said, “Even though the well isn’t an oil discovery, if Brulpadda proves to be anywhere near as big as the estimates of up to 1 billion barrels of oil equivalent resources, it will still be a game-changer for South Africa.”

“While a strong case can be made for the development of the gas economy, long-term growth requires a clear plan from government,” added Principal Analyst for Commodity Analytics at Wood MacKenzie Akif Chaudhry, commenting on the proper course of action for the future of the reserve.

Profile

More news on

×

SRK Consulting environmentalists call for screening of new exploration project

11 April 2019 Consultancy.co.za

While the domestic and international business environments have demonstrated their eagerness to explore the new oil & gas reserves discovered off the Southern Coast of South Africa, proper environmental guidelines need to be in place in order to ensure that the reserves are judiciously utilised, according to an SRK Consulting executives.

The discovery was made earlier this year, and sparked excitement amongst the South African business community, as it was touted as the solution to South Africa’s economic woes in recent times. The new reserves will reportedly provide approximately 1 billion barrels.

Nevertheless, Sue Reuther, an Environmental Consultant at SRK Consulting has urged that these reserves should be treated judiciously to avoid causing any serious harm to the environment. On the other hand, the usage of natural gas is a boon to the environment, give that it has a lower carbon output than coal energy.

The new reserves could cut carbon dioxide emissions by as much as 50%, if handled correctly. Scot Masson, who is also an Environmental Consultant at SRK Consulting, has recommended that the screening of environmental sustainability should be conducted amongst other preliminary regulatory permissions. 

SRK Consulting environmentalists call for screening of new exploration project

Developers usually have to apply for a technical cooperation permit, at which time an environmental screening should also be conducted. One considerable threat from exploration is the underwater noise emitted from exploration equipment.

“This underwater noise can have impacts on marine fauna, including pathological injury and behavioural responses that may affect feeding and breeding success. Marine fauna can also be injured in collisions with the seismic survey vessel or support vessel, or when they become entangled with towed equipment,” said Masson.

Reuther added that companies should make use of the mechanisms already in place to minimise the effects of such projects. “To minimise the chance of accidents, the oil and gas industry has developed and routinely implements protocols, such as airgun soft-start procedures and the use of blow-out preventers and water-based drilling muds. These inform mitigation measures included in EIAs conducted for such projects in South Africa.”

SRK Consulting has become an integral part of South Africa's development in the mining and natural resources domain. Recognised for its adept analysis and reporting, the firm is an important source of information for natural resources companies looking to navigate the current South African economy.