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Western Cape Business 2022

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FOCUS Massive offshore

FOCUS Massive offshore gas finds could put South Africa on the path to net zero Gas has the ability to boost the national economy and to help the country make a just transition towards cleaner energy, argues PASA CEO Dr Phindile Masangane. Today the biggest threat to humanity is climate change and the biggest threat to South Africa’s social stability is the high unemployment rate, which has primarily been caused by economic stagnation. As the global economy recovers from the devastating effects of Covid-19, demand for oil and gas has gone up significantly. If there was ever a need for proof that oil and gas still drive the global economy, recent statistics demonstrate the trend. The world’s developed economies industrialised on the back of oil and gas production and use. Now, just as Africa is on the cusp of being a significant gas producer and is making plans to use such gas for power generation, industrialisation and economic growth, the negative effect of greenhouse gas emissions on the environment has become undeniable. The urgency for action to mitigate the risk of climate change is no longer debatable. Between 1990 and 2018 the top five emitters have produced more than 50% of greenhouse gas emissions. During the same period South Africa has contributed 1% to global emissions. This is by no measure insignificant, and as a responsible global citizen South Africa must take steps to reduce its carbon footprint. The UN Framework Convention on Climate Change was established in 1992 to coordinate the global response to mitigate the threat of climate change, and specifically to get countries to commit to policies and plans that will ensure that the average global temperature rise is kept less than 1.5°C above pre-industrial levels. The International Energy Agency (IEA) proposes that to achieve this goal the world’s energy sector must reach net zero emissions by 2050. In its global energy net zero 2050 pathway, the IEA acknowledges that there is no single pathway to this goal, as developed and developing countries face different socioeconomic challenges and have contributed disproportionately to greenhouse gas emissions to date. What a number of environmental interest groups seem to be ignoring in the IEA “Net Zero by 2050” report is the acknowledgment that there will be a differentiated approach to a clean energy future, taking into consideration the cost of the new clean energy technologies and the economic consequences of transitioning for each country. The IEA emphasises that each country must develop its own pathway to a net zero emission future. South Africa’s economy has been predominantly powered by coal, which is also a significant contributor to the country’s economy in terms of WESTERN CAPE BUSINESS 2022 28

GDP as well as employment. Of all primary energy resources coal is the most carbon-intensive, and South Africa therefore has a relatively high carbonintensive economy, contributing about 1% of annual global greenhouse gas emissions. Discoveries in Outeniqua basin In addition to coal, South Africa imports oil, gas and petroleum products for its energy needs as the upstream petroleum industry is still at a nascent stage. The two recent world-class gas discoveries in the Outeniqua basin off the south coast of the country are the biggest petroleum discoveries made in South Africa. The development of these discoveries has the potential to replace more than 2 300MW of diesel-fired electricity generation in Gourikwa, Dedisa and Ankerlig, thereby reducing the carbon emissions from these plants by more than 50% while eliminating sulphur oxide and nitrogen oxide emissions, which are also harmful to the environment. Gas is therefore an obvious bridge to a lower carbon future in South Africa. Importantly, these gas discoveries could restore the gas-to-liquid refinery in Mossel Bay to full production and profitability, saving about 1 200 direct jobs. A complete shutdown and abandonment of this refinery would not only lead to job losses at the refinery, but the effects would reverberate throughout the town of Mossel Bay and the Southern Cape region, since the refinery contributes about R2-billion a year, or 26% of the Mossel Bay economy, and 6% to the Southern Cape economy when producing at full capacity. The Petroleum Agency South Africa awaits the licensee of these gas discoveries submitting its production right and environmental authorisation applications when the exploration right expires, or earlier. The agency expects the licensee to use world-class technologies and standards to minimise the effects of the gas and gas condensate production on the environment, while maximising the in-country benefit or local content from this development to support South Africa’s economic recovery. These discoveries could indeed support both the country’s economic recovery and its transition to a clean energy future. ■ The Stavanger oil rig has passed Cape Point several times on its way to making discoveries off Mossel Bay. Credit: Anton Swanepoel VALUE STATEMENT Petroleum Agency SA aspires to be a world class organisation, committed to: • Professional excellence • Integrity • Direct, open, consultative communication • Transparency • Respect • Teamwork • Active regard for our natural environment • Corporate social responsibility in an empowering, vibrant workplace where diversity is valued. MISSION To promote, facilitate and regulate exploration and sustainable development of oil and gas contributing to energy security in South Africa. VISION A diverse upstream industry contributing to energy security through sustainable growth in exploration and development of oil and gas. CONTACT DETAILS Telephone: +27 21 938 3500 Email: plu@petroleumagencysa.com Website: www.petroleumagencysa.com 29 WESTERN CAPE BUSINESS 2022

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