A trillion rand over 20 years could pour into the country if a gas discovery in the Outeniqua Basin, off the southern Cape coast, is tapped.
French oil and gas company Total announced on Thursday that it had found gas condensate on the Brulpadda Prospects, which is located on Block 11B/12B in the Outeniqua basin.
It represents about a billion barrels of oil equivalent and is found about 175km off the southern Cape coast.
President Cyril Ramaphosa shared news of the find during his State of the Nation Address on Thursday night.
He said: “This could well be a game-changer for our country and will have significant consequences for our country’s energy security and the development of this industry. We congratulate Total and its various partners and wish them well in their endeavours.”
Ramaphosa said some had described it as a “catalytic find”. Several economists and experts in the field of oil and gas explorations shared his enthusiasm.
They believed there could be other significant finds which would have a positive impact on the country’s fuel costs. South Africa imports crude oil and pays in American dollars.
Total’s senior vice-president, Kevin Mclachlan, said: “We are very pleased to announce the Brulpadda discovery, which was drilled in a challenging deep-water environment. With this discovery, Total has opened a new world-class gas and oil play and is well positioned to test several follow-on prospects on the same block,” said Mclachlan.
Mineral Resources Minister Gwede Mantashe visited the rig last weekend and said Total would follow up with three-dimensional seismic tests on four exploration wells.
Aldworth Mbalati, chief executive of South African oil and gas exploration company DNG Energy, said any natural resource found was good for the country.
“It means we have a resource that enables energy security and will benefit the people of our country. Gas plays a critical role as a transition fuel which is cleaner and its CO2 emissions are 60% less than fossil fuels.
“So, with gas, we are achieving our objective of keeping the country’s economy running and preserving the environment,” said Mbalati.
However, he advised a quiet celebration right now.
“It is not the world’s greatest find. There is still a long way to go to realise the value out of the asset, but it has put the country on the map as a gas province. It also means we potentially have bigger reserves and resources.”
Luvuyo Mokasi, chairperson of the Central Energy Fund, said gas or oil on our shores spoke to the broader concept of the ocean’s economy, which the president spoke about during his address.
“It will be helping the fuel and the energy security of the country and it will be a mechanism to help counter the country’s ever-rising fuel price.”
Mokasi said it was exciting because blocks that were near Total’s site were owned by PetroSA.
“This gives us a sense of what’s in our seas; there is more to come,” Mokasi predicted.
Dr Azzar Jammine, director and chief economist at Econometrix, said he was aware that Total’s find was about R1trillion over 20 years.
“So that’s about R50billion, which equates to about 1% of the gross domestic product. If it works, that’s great. But, it has to be managed well. If not, we won’t get the full benefit.”
Economist David Shapiro agreed the news was positive. “We import most of our oil and gas needs. If we prevent that, it will save us enormous amounts in foreign exchange.
“But before we get excited, let’s get more details about the quality and success,” he said.
Professor Bonke Dumisa of the University of KwaZulu-Natal said while the find had the potential to alleviate some of South Africa’s economic problems, we should share some of the benefits with our neighbours.
Dumisa said he was also disappointed that media had not made a bigger splash of the news since the president’s address.
“This could spell a better life for all, provided we don’t allow corruption to creep in. Look at what happened in Nigeria, the people haven’t benefited from their oil reserves,” Dumisa said.
Melita Steele, Greenpeace’s senior climate and energy campaign manager, said there was always the risk that deep sea oil exploration would impact on marine life.
“We believe drilling off-shore is too risky,” she said.