South African Business 2025

OVERVIEWOil and gasPlans

OVERVIEWOil and gasPlans to develop gas fields have been put on hold.TotalEnergies has announced that it will not proceed withplans to develop the Brulpadda and Luiperd projects off thesouth-eastern coast of South Africa.Although the blocks were found to be rich in gas, thecompany said that they were not “commercially viable” to develop,without going into details. The National Department of MineralResources and Energy has declared that it is confident that anotherinvestor will be found for the project and TotalEnergies still hasexploration rights over a number of other offshore fields such asOrange Basin Deep which is located 220km west of Cape Town inwater depths between 2 800m and 4 200m.Other oil majors exploring in those South African and Namibianwaters, collectively known as the Orange Basin, include Galp, Chevronand Shell. The fields are said to be capable of yielding up to 7.5-billionbarrels of recoverable oil. The Financial Mail reports that more than halfof TotalEnergies’ worldwide exploration budget is being invested in theOrange Basin.The body responsible for promoting and regulating SouthAfrica’s oil and gas sector is Petroleum Agency SA (PASA). With regardto the discoveries off the West Coast, PASA’s Manager: ResourceSECTOR INSIGHTIn May 2024, bpSAcelebrated 100 years inSouth Africa.Evaluation Manager David vander Spuy says, “The area underlicence is bigger than thelicence area of the south coastand in our opinion holds greatpotential. TotalEnergies and itspartners have submitted a workprogramme for initial drilling ofup to five exploration wells inthe area.”In celebrating its centenaryin South Africa, bp SouthernAfrica (bpSA) explained how andwhy it has divested from variousSOUTH AFRICAN BUSINESS 202558PHOTO: PASA

OVERVIEWbusinesses in the country in recent years. The global goal is to pivot“from being an international oil company that produces resources to anintegrated energy company that delivers solutions for customers”.Servicing of the commercial, industrial and agricultural sectors isnow being done with Masana Energy Solutions and its empowermentpartners. The company’s East London terminal was sold to WASAA, ablack-female-owned company and secondary transport has beenoutsourced to DP World and Makwanda Supply & Distribution. At thesame time, bpSA has committed to upgrade more than 500 servicestations and find more black franchisees. In addition, the companyintends upgrading and expanding the retail offerings of forecourts andoptimising the supply model by implementing an integrated productand supply chain.Another disinvestment by bpSA was in Durban. Together with thejoint owners of the SAPREF Refinery, Shell Downstream SA, the decisionwas made to sell the 180 000 barrel-a-day plant to the Central EnergyFund (CEF). The reported price paid by the CEF, the entity chargedwith managing South Africa’s energy assets and which reports to theDepartment of Mineral Resources and Energy (DMRE), was R1. When itwas operating at full capacity, the facility accounted for roughly 35% ofthe country’s refinery capacity.Durban’s other oil refinery, Enref, was hit by a fire in December 2020and it has since been operating as a storage facility for owners Engen.South Africa is a net importer of fuel and the Port of Durban handles80% of South Africa’s fuel imports. In April 2024, the Competition Tribunalapproved a proposed a merger whereby Vitol Emerald Bidco intendsto acquire Engen, subject to a set of competition and public interestconditions. Among Vitol’s assets is the Burgan Cape Terminal, a storageand distribution facility in Cape Town.Natref in Sasolburg is South Africa’s only inland crude oil refinery andis a joint venture between Sasol Oil and Total South Africa.Gas futureThe Virginia Gas Project in the Free State owned by Renergen hasexperienced some delays in producing helium but as of August2024 the company announced that its liquid helium productiontrain was fully operational and sales to customers could start.Whereas it took nine years to find the R1.2-billion needed to fundthe first phase of the Virginia Project, investors are now looking verykeenly at its prospects. An amount of R3.6-billion has been investedby Ivanhoe Mines to secure someofftake rights and the CentralEnergy Fund has purchased a 10%stake for R1-billion.Van der Spuy reports thatapart from the biogenic gasdiscovery being worked on in theFree State, the country also has“other types of unconventionalgas onshore, such as coal-bedmethane and shale gas”.The National Energy Regulatorof South Africa (Nersa) has approvedan application from national utilityEskom to build a 3 000MW gas powerstation in Richards Bay. An allocationof 3 126MW to natural gas has beenmade in the national medium-termenergy policy to 2030. The NationalDepartment of Mineral Resourcesand Energy allocated one of thefirst two gas-to-power plants to beconstructed under the IndependentPower Producer ProcurementProgramme (IPPPP) to Richards Bay.This has the potential to turn theRichards Bay Industrial DevelopmentZone (RBIDZ) into an energy hub.Another site has been identifiedwithin the Coega SEZ in theEastern Cape, but no plans havebeen published. The Western CapeProvincial Government is lobbyingfor Saldanha to receive a licenceto run such a plant. Environmentalgroups have lodged appeals tostop the building of the plant,which is a step along the pathwayoutlined by national governmentto use gas as a “transitional fuel”,away from fossil fuels towardsgreener sources of power. ■ONLINE RESOURCESCouncil for Geoscience: www.geoscience.org.zaSouth African Oil and Gas Alliance: www.saoga.org.zaSouth African Petroleum Industry Association: www.sapia.co.za59SOUTH AFRICAN BUSINESS 2025