As the African Energy Week conference kicked off in Cape Town on Monday, a stark reality about the state of South Africa’s oil and gas landscape became clear. While many African countries have aggressively reformed their regulatory and policy frameworks to attract international investors, South Africa remains a laggard in this critical sector.
The opening performance at the conference, where dancers sang “drill, baby, drill”, highlighted a growing sentiment in the energy sector. Just two years prior, such a refrain would have been inconceivable at energy conferences, dominated as they were by discussions on decarbonisation and the transition to renewable energy. Yet, amid the current global energy landscape, oil and gas resources are being recognised as essential to energy security for many nations.
Andrew Inglis, CEO of Kosmos Energy, underscored the urgency of the situation, pointing to a recent report by the International Energy Agency predicting that global oil and gas investment could reach $570 billion by 2025. He highlighted that a staggering 90% of this figure would be required simply to replenish the depletion of existing oil reserves. With the long lead times and substantial capital investment required for oil and gas projects, Inglis called for not just regulatory certainty, but also enduring partnerships between international oil operators and host governments.
However, the situation in South Africa, as described by NJ Ayuk, executive chairman of the African Energy Chamber, is alarming. He described the country’s oil and gas development as “a mess,” hampered by relentless legal challenges and an unsuitable regulatory environment that hinders projects from moving forward. “It is time to pass legislation,” he asserted, pressing for immediate action from South African authorities.
Gil Holzman, President and CEO of Eco Atlantic Oil & Gas, echoed Ayuk’s sentiments, emphasising the need for the South African government to take a more engaged role in facilitating growth in the oil and gas sector. While Namibia has seen success with numerous exploration wells drilled in the Orange Basin, he pointed out that South Africa has failed to drill even one in its own portion of the basin during the past year. Holzman noted that seismic data suggests up to 30 billion barrels of oil could still be waiting to be tapped.
In addressing the critical need for new oil refining capacity, Holzman argued that exploration must precede exploitation, underlining the imperative for the South African government to safeguard international investments. “This cannot continue in South Africa,” he stressed emphatically.
The challenges extend beyond regulatory hurdles. Tseliso Macubela, deputy director-general of Mineral and Petroleum Regulation at South Africa’s Department of Mineral and Petroleum Resources, acknowledged deficiencies in public consultation and technical expertise, which hinder the establishment of a robust regulatory framework. He vowed to collaborate with international investors to enhance regulatory approaches that would facilitate the growth of the sector.
Godfrey Moagi, CEO of the newly formed South African National Petroleum Company, acknowledged the significant time and investment required to develop a successful oil and gas sector. He underscored the necessity of collaborative partnerships between investors and government stakeholders, warning that neglecting the wealth of untapped resources could spell disaster for the nation. “The road ahead may be a bit bumpy, but we need to get excited,” he remarked, urging stakeholders to embrace the potential of the sector.
In contrast, other nations such as Ghana, Senegal, and Nigeria have reported significant progress and investment inflow into their oil and gas sectors, as revealed during the conference. Senator Heineken Lokpobiri of Nigeria shared that his country, which has faced stagnant oil production for a decade, has introduced new regulations and incentives designed to bolster both international investment and operational efficacy.