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Opportunity Issue 99

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Opportunity magazine is a niche business-to-business publication that explores various investment opportunities within Southern Africa’s economic sectors and looks to provide its readers with first-hand knowledge about South African business. Opportunity also looks to present South African business to international markets that may have interests in investing in South Africa. The publication is endorsed by the South African Chamber of Commerce and Industry (SACCI).

ENERGY Credit: PASA

ENERGY Credit: PASA Exciting discovery off Southern Cape coast is great news for Southern Africa’s gas market Petroleum Agency SA is upbeat about drilling prospects. In 2019 Total and its partners created a stir with the announcement that gas condensate had been found at a site called Brulpadda off the coast of Mossel Bay. In 2020, the nearby Luiperd prospect in Block 11B/12B delivered more exciting news. The block, in the Outeniqua Basin 175km off the southern coast, covers an area of about 19 000km² in water depths of 200m to 1 800m The exploration was done by the semi-submersible rig Deepsea Stavanger (pictured), which journeyed twice from Norway to lead the exploration projects. The Luiperd prospect is the second of five prospects in the group. Light oil and gas condensate were discovered in significant quantities. The exploration drilling in Block 11B/12B is in deep waters similar to where the gigantic Mozambique Rovuma Basin gas discoveries were made in 2011 and 2012. The two finds raise the odds of Total investing in what it calls a “world-class” offshore gas site. The drilling campaign employed 195 South Africans with specialist skills but the potential spinoff is enormous for the Western Cape and South Africa, if the find leads to drilling and commercialisation. If Total goes ahead, the PetroSA gas-toliquids refinery at Mossel Bay (Mossgas) could be revived and the idea of creating a gas market in South Africa would receive a massive boost. Commissioned in 1992 as the world’s first GTL refinery, Mossgas has practically run out of feedstock and needs to find new sources to continue functioning. PetroSA is South Africa’s national oil company. These discoveries will have exciting repercussions for the development and growth of South Africa’s oil and gas sector. As Kevin McLachlan, the Senior Vice President Exploration at Total, said at the time of the find, “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.” Total as operator holds a 45% participating interest in Block 11B/12B, while Qatar Petroleum (25%) and CNRI (20%) are the other participants. Africa Energy holds a 4.9% effective interest in the Exploration Right for Block 11B/12B. The Company owns 49% of the shares in Main Street 1549 Proprietary Limited, which has a 10% participating interest in the block. If the local gas market is to take off and thrive, significant drilling has to take place. As the CEO of Petroleum Agency SA, Dr Phindile Masangane, describes the situation, “That would be a game-changer for South Africa’s upstream oil and gas industry.” She added, “The recent discovery by Total and its JV partners at Brulpadda is the first giant step in that direction. 16 | www.opportunityonline.co.za

" " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " " ENERGY Locality Coal Field SOUTH Gas discovery Provincial boundary Karoo Basins Northern Cape Mafikeng AFRICA North West Free State Eastern Cape Bloemfontein Molteno Klerksdorp Welkom Virginia Aliwal North Queenstown LEPHALALE BASIN Indwe Maseru Lephalale Waterberg Kroonstad Free State MAIN KAROO BASIN Molteno Elliot Maclear Modimolle Bela-Bela Pretoria Johannesburg Gauteng Bethlehem Lesotho Figure 32. Distribution of coal fields in the Karoo-aged basins in South Africa (digital geological data sourced from Council for Geoscience) Coal-based methane could be sourced from several areas. Credit: PASA, with digital geological data sourced from the Council for Geoscience. Frankfort TULI BASIN Tuli Mopane Evander Umtata Limpopo Mokopane Witbank Secunda Standerton Harrismith Polokwane SPRINGBOK FLATS BASIN Witbank Highveld Musina Tshipise Tshipise Makhado TSHIPISE BASIN Springbok Flats Ermelo Ermelo Volksrust Utrecht Newcastle Estcourt Utrecht Dannhauser Klip Rivier Pietermaritzburg Vryheid KwaZulu-Natal Port Shepstone “Further development of the discovery is highly dependent on the success of this further drilling,” comments Dr Masangane. “Possible development could see condensate being piped to the PetroSA facility in Mossel Bay,” she adds, “but these decisions are ultimately up to the operator, Total and its partners.” International interest Petroleum Agency SA (PASA), which encourages exploration and regulates the oil and gas industry, has noted the significance of international oil companies committing to exploration off South Africa’s coast. Increased confidence by such companies can only lead to growth in the industry and with the massive gas finds in the Rovuma Basin off Mozambique there are sure to be more companies interested in South Africa’s potential. Pafuri Mbabane Durban Pafuri Phalaborwa Mpumalanga Kangwane Swaziland Vryheid Nongoma Nongoma Somkele Richards Bay 34 In addition to adjudicating on coastal fields, the agency has awarded coalbed-methane-gas exploration rights in KwaZulu- Natal and natural gas exploration permits in the Free State. Natural gas lies also lies offshore to the west of South Africa in the Atlantic Ocean (Ibhubesi). Block 2A of the Ibhubesi gas field northwest of Saldanha is estimated to have reserves of 850-billion cubic feet of gas. Dr Masangane says the two recent world-class discoveries “place South Africa in pole position to be a notable gas-producing country”. Once indigenous gas becomes available, it becomes much easier for the domestic gas market to develop, including beneficiation of gas to chemicals. “The Brulpadda and Luiperd discoveries of gas and condensate are the largest hydrocarbon discoveries made in South Africa to date,” she says. “These results are for only two drilled prospects in the Paddavissie feature where three further prospects remain to be drilled. There could be sufficient St. Lucia gas to feed the Mossel Bay plant at full capacity for more than 40 years.” The drilling campaign has long-term benefits to South Africa which include introducing frontier deep water (>1400m) exploration drilling, building confidence and potentially shifting petroleum exploration activities to private international oil companies (IOCs), de-risking deep-water acreage. This will encourage other IOCs to take risk in drilling deep-water prospects, which could result in the country discovering more oil and gas resources. All of South Africa’s coastal provinces stand to benefit from an increase in oil and gas activity. Special Economic Zones (SEZs) in the Western Cape (Saldanha and Atlantis), the Eastern Cape (Coega and East London) and KwaZulu-Natal (Richards Bay) could each identify a niche in which to operate. Saldanha SEZ is already marketing itself as a centre for the marine sector and the oil and gas industries. The Saldanha Bay Industrial Development Zone (SBIDZ) is central to the plan to grow the sector in the Western Cape. Staff from the SBIDZ actively sought investors for the zone at the Africa Oil Week, which was held in Cape Town in 2019. The Western Cape Provincial Government and the National Department of Trade, Industry and Competition (dtic) invested R500-million in the development of core infrastructure at the Saldanha Bay IDZ. The SBIDZ has signed a lease agreement with the Transnet National Ports Authority. The Western Cape’s status as an oil and gas hub was enhanced with the opening of an open-access liquefied petroleum gas (LPG) import and storage terminal at Saldanha Bay. A public-private partnership is behind the R1-billion terminal, the largest of its kind in Africa. Investors include Sunrise Energy, the Public Investment Corporation (PIC), Royal Bafokeng Holdings and the Industrial Development Corporation (IDC). Credit: Anton Swanepoel www.opportunityonline.co.za | 17

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