9 minute read
Cover Story - Dr. Tshepo Mokoka, CEO at the Petroleum Agency of South Africa
The Road From Upstream Petroleum Exploration To Production
The Petroleum Agency of South Africa (PASA) has a major role in driving the country’s strategic objectives.
South Africa has four major sedimentary basins offshore along a coastline of more than 2700 km and several massive sedimentary basins (i.e. the Karoo Basin) onshore covering more than 70% of the total landmass. These basins are considered extremely high prospective areas for oil, gas and other mineral deposits. Petroleum Agency SA is a state owned entity that was established in 1999, reporting to the Central Energy Fund (CEF) and the Department of Mineral and Petroleum Resources (DMPR). The Agency is designated according to Section 70 of the Mineral and Petroleum Resources Development Act (MPRDA) to regulate South Africa’s upstream petroleum industry through a licensing system.
Furthermore, we are mandated to evaluate and promote South Africa’s prospective oil and gas resources, while also acting as custodians of all geotechnical data produced through oil and gas exploration and production activities in the country. From time to time, the Agency is required to provide strategic and technical advice to the government on issues of oil and gas exploration and production, and carry out special projects at the request of the Minister. The overall mandate of the oil and gas industry in South Africa is to ensure security of supply in the energy industry and drive transformation.
South Africa is mainly known to be a major player in the global mining space, but very little is known about our upstream oil and gas activities. Does the country actually have oil and gas deposits, if so, what role has this industry played in the development of the country?
South Africa is one of the most advanced and affluent economies in Africa, owing this prosperity to its long and rich mining history of over 170 years, which served as the primary catalyst for transformation. Some of the most valuable minerals in the world, such as gold, coal, diamonds, Platinum Group Metals (PGMs), critical minerals, and more, are abundantly hosted within our rocks. As a result, South Africa is positioned as a major player having one of the biggest sectors in the global mining industry.
What most people often overlook is the fact that South Africa is equally rich with oil and gas resources, located on both our onshore and offshore basins. The oil and gas industry in South Africa dates back to the 1930s with the discovery of several oil and gas fields, the construction of major infrastructure and the establishment of strategic government corporations such as the Central Energy Fund (CEF), Petroleum Agency SA (PASA), Strategic Fuel Fund (SFF), PetroSA, iGas, etc., to drive the industry.
Key oil and gas infrastructures in South Africa include: four crude oil refineries, Gasto-Liquid (GTL) refinery by PetroSA, Coal-to-Liquid (CTL) refinery by Sasol, various storage terminals, as well as a network of pipelines by Transnet and multiple distribution facilities across the country. Most “majors” in the global oil and gas industry, are also key players in South Africa, dominating the entire value chain from upstream to downstream, i.e. TotalEnergies and Shell. From the perspective of the value chain, it is clear that South Africa has extremely mature midstream and downstream petroleum sectors, whereas the upstream sector remains in its infancy stages.
What is our current oil and gas supply as a country?
Currently, South Africa’s only source of crude oil is and has always been imports, mainly from the Middle East and OPEC members, while natural gas is imported from the 3.2 Tcf discovery in Mozambique’s Temane-Pande gas fields, estimated to go into depletion by June of 2026. These gas fields were discovered in the 1960s by Gulf Oil, and have been operated by Sasol to supply the South African gas market through the 864 km ROMPCO pipeline for a period of 25 years.
The second source of natural gas in South Africa was PetroSA from their 1.2 Tcf gas fields discovered in Block 9 (offshore Bredasdorp Basin) during the late 80s. The discovery supplied and sustained PetroSA’s GTL refinery for over 20 years, and went into depletion in 2020/21.
Although South Africa is not an established major oil and gas producing state on the global scheme of things, exploration efforts by numerous oil and gas companies, supported by technical evaluations from the Petroleum Agency SA, indicate an estimation of approximately 26 billion barrels (Bbbl) of oil and over 300 trillion cubic feet (Tcf) of natural gas deposits (Figure 1). These scenarios highlight how South Africa’s “road from exploration to production” positions us as a major potential domestic supplier and global exporter of oil and gas, thus presenting the country with endless opportunities in the future.
In terms of location, which areas are mainly prospective for oil and gas deposits in South Africa and what are the estimated volumes relative to each area?
Massive potentials of unconventional natural gas deposits can be observed from various sedimentary basins inland, divided into the northeastern (27.7 Tcf of coal-bedmethane and 0.5 Tcf of deep biogenic gas) and southern (209 Tcf of shale gas) activities (Figure 1).
CBM deposits are commonly seen in Limpopo and Mpumalanga provinces where coal mining is prominent, deep-biogenic gas deposits are associated with gold mines in Welkom, Free State Province, whereas south of the country in the Cape provinces, we see high potentials of shale gas deposits. Furthermore, extremely high estimated volumes (59 Tcf) of conventional gas deposits are observed from the following offshore sedimentary basins; Orange (west coast), GreatOuteniqua (south coast), Durban (east coast) and Zululand (east coast). All coastal provinces (KZN, EC, WC, NC) in South Africa are regarded as potential hosts for offshore oil and gas resources.
What value can we derive from fully unlocking these oil and gas potentials, what would this mean for our country in a grand scheme of things?
Although South Africa estimates over 300 Tcf of natural gas deposits, less than 3% of this potential has been proven to date. If the full potential was to be unlocked, the country would rank number one in Africa and top 10 in the world in terms of reserves. Furthermore, converting 26 Bbbl (Billion barrel) of oil from estimated resources to proven reserves has the potential to put South Africa on Africa’s top 5 list of oil producing giants. In simple terms, South Africa is a major mining country with our economy thriving on the back of the mining industry. The mining industry has a billion dollar global market, whereas the oil and gas industry is on the trillion dollar market side.
Therefore, if South Africa was to unlock the full potential of its own oil and gas resources, the benefits could be extremely higher than mining. Additionally, benefits of the oil and gas industry translate to reduced exposure to geopolitical uncertainties, security of energy supply, energy sovereignty and economic transformation.
What are some of the investment opportunities you can highlight for us in the oil and gas industry?
If we only zoom into the 16 member countries of the SADC region, we see a population of more than 370 million people. South Africa records the third largest population in the region with more than 60 million people. On a regional scale, these statistics instantly point to South Africa having the biggest market for oil and gas supply. Endless opportunities can be derived across the entire value chain from operating exploration and production blocks upstream, to supplying consumers with the final petroleum products downstream.
Just to list a few, there are opportunities in; gas to power projects, LNG hubs, development of ports to support the industry, construction and/or upgrading of refineries, construction of more local and regional pipelines such as ROMPCO, grid infrastructure, storage units, distribution systems (rails, roads), offshore platforms, and so forth.
What projects should we look out for in South Africa’s upstream sector?
Offshore projects of importance include the 3.4 Tcf gas discovery in Block 11b/12b, located offshore in the Southern Outeniqua Basin about 175 km southeast of Mossel Bay (Figure 2). This is still one of South Africa’s biggest gas discoveries thus far with an opportunity to move into development and the production phase. Furthermore, PetroSA’s existing offshore platform and Mossel bay GTL refinery increase the attractiveness of Block11b/12b in terms of a potential off-taker and existing infrastructure.
On the Orange Basin (west coast), exploration activities in Block 5/6/7, Deep-Water Orange Basin (DWOB) and Block 3b/4b are advancing very well with high potentials for more 3D seismic surveys and drilling of multiple exploration wells. Furthermore, the West Coast still has a 0.5 Tcf discovery of the Ibhubesi gas field, Block 2A, with a high potential for development (Figure 2).
Current inland activities of note include the Virginia gas project in Welkom, Free State Province. This is the only onshore operation with an active Production Right (PR). The project mainly entails production of methane gas (LNG) and helium. There is a lot of progress in the project and the operator continues to drill more development wells to add to their current feedstock. Another onshore highlight worth mentioning is the much progressed Amersfoort gas project in Mpumalanga Province, with estimated P50 gas of 6 Tcf from its CBM and conventional sandstone plays (Figure 2).
The project is now evolving into development and production stages and the operator is engaged in discussions with numerous potential gas off-takers in the energy sector. As stated earlier, South Africa’s estimated shale gas potential is 209 Tcf located onshore, in the Karoo Basin. Therefore, the shale gas project is one of the country’s critical onshore projects of note. To better understand this 209 Tcf potential, geo-scientific and environmental studies are currently underway to evaluate the nature of the subsurface geology in the region as it relates to potential petroleum deposits. The studies will also inform policies and legislations to better regulate the industry.
