Will SA reap bonanza of Total’s gas find?
More should be done to create an offtake market for the gas find or it’ll be exported
Total’s $100bn gas find in the Outeniqua Basin off the Western Cape coast could allow SA to diversify its energy mix, cut reliance on coal, boost refined product exports and slash its trade deficit in energy products.
In 2017 the Western Cape spent R76bn importing crude oil, its main import, but exported only R13.2bn in refined petroleum.
"If SA is able to use this new find to boost exports of additional refined products, it could reduce this deficit significantly," says Tim Harris, CEO of Wesgro, the investment facilitation arm of the province.
Fortuitously, the provincial government recently identified oil and gas as a key sector to drive the regional economy and has been working to develop it, focusing mainly on the Saldanha Bay industrial development zone and the servicing opportunities created by oil discoveries in Angola and West Africa.
As a result, the province already has many of the skills necessary to take advantage of the new opportunities that may arise from Total’s gas find, including the ability to service oil rigs and other maritime vessels.
But significantly more technical skills will be needed to support a thriving gas industry in SA. This is especially so in areas like welding and general oil and gas maintenance, says Harris.
New infrastructure may also be needed. The government will have to investigate expanding the gas terminal at Mossel Bay as well as the port’s overall capacity.
"While this find can be a significant game-changer, it will require further interventions," says Harris.
He proposes that SA enact legislation to spur the sector’s development — for example, by allowing independent power producers (IPPs) to sell the electricity they generate to users other than Eskom, and by allowing the private sector to build and operate gas pipelines.
There is a real risk that SA won’t manage to create sufficient offtake markets for the discovered gas, so that Total ends up exporting it all instead.
To prevent this and maximise the economic benefits of the new find, Harris and Alan Winde, the DA’s premier candidate for the Western Cape, are calling for two liquefied natural gas power stations to be built in the province.
They would also like Eskom to transfer its Atlantis open-cycle gas turbine unit, which burns diesel to boost electricity supply in times of crisis, to an IPP that could convert it to run on gas.