• Petroleum Agency SA (PASA) is responsible for promoting and regulating oil and gas exploration in South Africa, archiving all data related to oil and gas exploration, and developing the local upstream industry for the benefit of all South Africans.

    One of the agency’s roles is to counsel government on issues related to oil and gas. The agency has recently played a leadership role in the task team process investigating shale gas exploration and the controversial technique of hydraulic fracturing.

    In carrying out its mandate, PASA attends technical geological conferences and hosts data room visits with players in the oil, gas and energy sectors to attract foreign investment to South Africa. PASA supports exploration and exploitation of onshore and offshore oil and gas resources and regulates exploration and production activities.

    Any organisation wanting to exploit resources has to approach and obtain a permit from PASA. Only investment can further grow the South African economy and create jobs, which would in turn assist in alleviating the problems around unemployment and contribute to the aims of the National Development Plan 2030.

    South Africa is on the brink of major developments in the upstream industry and the next few years will be key in determining its future energy profile and how oil and gas can contribute to the greater energy mix. The demand for energy has surpassed supply, therefore alternative energy sources are being looked at to deal with the ever-growing demand. PASA, together with the Council for Geoscience (CGS) and the Department of Mineral Resources (DMR) is conducting extensive studies into South Africa’s potential shale gas resources. Major research is under way and the studies being conducted centre around the Beaufort West area in the Karoo. The work focuses on the reserves, the technology that is required to get the gas out of the ground and the value chain.

    It is PASA’s hope that indigenous oil and gas may soon play a significant role in the country’s energy supply

    Natural gas lies offshore to the west of South Africa in the Atlantic Ocean (Ibhubesi) and off the southern coast in the Indian Ocean (Bredasdorp Basin). Both these fields have great potential. The period before the recent drop in oil price saw unprecedented interest and a record level of activity in petroleum exploration in South Africa, and exploration interest remains high. With this said, most of the oil that feeds the country’s four crude-oil refineries is imported, but a great deal of South Africa’s fuel is generated by a natural gas conversion plant on the coast and a coal-to-fuel facility near the country’s industrial heartland. In addition to South Africa’s crude-oil refineries, natural gas conversion plant, coal-to-fuel and gas-to-liquid crude oil refineries, Sasol produces fuel from coal at its Secunda facility, and PetroSA has the country’s only gas-to-liquid facility in Mossel Bay.

    With regard to current offshore oil and gas exploration activity, in the Orange Basin, PetroSA has been joined by Cairn India, and they are looking at both oil and gas potential. Sunbird Energy and partners have a production licence for the development of the Ibhubesi gas field and intend to pursue the option of independent power production. Africa Energy recently acquired the acreage inshore of the Ibhubesi gas field, where they will be pursuing the oil discovery in the A-J graben.

    Other operations in Western Cape waters include exploration of the deepwater and ultra-deepwater of the southern Orange Basin by PetroSA together with Anadarko, and exploration by Sungu Sungu Petroleum.

    There is continued interest in the ultra-deepwater of the northern sector, and it is the agency’s opinion that there is great potential for both oil and gas reserves in this basin.

    The south coast has seen ongoing exploration in Block 9 from PetroSA, where they have concentrated on finding further assets close to existing infrastructure and on the development of the F-O gas field.

    Other activity off the south coast includes exploration of the deepwater by partners Total and Canadian Natural Resources and exploration of the northern Pletmos, Algoa and Gamtoos basins by Sungu Sungu and New Age. Total has also been granted an exploration right to the south.

    Off South Africa’s east coast, Impact Oil and Gas partnered with ExxonMobil. ExxonMobil has also taken up further acreage, while Eni, successful in finding enormous gas deposits to the north in Mozambique, has joined Sasol in their exploration efforts of South Africa’s east coast.

    The agency attends technical geological conferences and hosts data room visits with oil, gas and energy industry players to attract foreign investment to South Africa

    Onshore, the primary interest is in natural gas resources. These are of the unconventional types, which include biogenic gas, coal bed methane and shale gas.

    The first onshore natural gas production right around Virginia in the Free State province was acquired by Tetra 4 (formerly Molopo South Africa Exploration and Production), and is now a subsidiary of Renergen. Tetra 4 has a gas sales agreement with Megabus for compressed natural gas for use in vehicles. This small project marks the first economic production of gas onshore.

    Naturally, coal bed methane (CBM) exploration is concentrated in the coal-bearing basins located in the north eastern parts of the country. Operators have already carried out successful drilling in terms of their work programmes. The most advanced CBM projects in South Africa are located in the Waterberg coalfields near Lephalale in the Limpopo province and Amersfoort coalfields near Ermelo and Volksrust in the Mpumalanga province respectively. The preservation for gas associated with the coal in these regions is well understood and our operators continue with appraisal to better understand the commercialisation potential of the gas resources.

    Many will be aware of the environmental impact assessment estimate of 370 Tcf of gas as a shale gas resource figure for the Karoo. Our own estimate of the resource is around half that figure, yet still, represents a critical resource.

    At the time of writing, the Minister has yet to lift the moratorium through a notice in the Government Gazette, and it is this announcement that will guide and inform the process in future.

    The above summary presents some of the very exciting developments under way, and also a little of what we expect in South Africa’s upstream industry over the next few years. It is our hope that indigenous oil and gas may soon play a significant role in the country’s energy supply.

    Tygerpoort Building,
    7 Mispel Street, Bellville, 7530,
    Cape Town, South Africa
    Tel: + 27 (0)21 938 3500
    Fax: + 27 (0)21 938 3520

    Faced with growing competition, high energy costs, increased regulation and more aggressive sustainability goals, facility owners and plant managers are under extraordinary pressure to reduce expenses, while achieving greater productivity and energy efficiency. Most industries use some form of air or gas compression to generate power to run equipment, tools and plant processes. It is an extremely convenient source of power, often referred to as the fourth utility. Yet, in many cases it is deployed inefficiently.

    The US Department of Energy (DoE) estimates 30% to 50% of compressed air power is lost during operation. Those losses can be a result of leaks, poor maintenance, bad system design, wasted heat and/or pressure losses. This is why industries are making commitments to increase energy efficiency.

    For example, nearly 160 leading manufacturers and industrial-scale organisations have partnered with the DoE on its Better Plant Initiative and signed a voluntary pledge to reduce their energy intensity by 25% over a 10-year period.

    Efficiency standards are coming
    In addition to self-regulating efforts, government bodies and industry groups are driving more stringent industry standards to ensure today’s air-compressor systems meet peak energy efficiency and performance targets. Currently, compliance with proposed compressor standards is voluntary in the US and Europe, but emerging regulatory developments are likely to change that.

    Governing bodies leading the push for implementation of minimum efficiency standards include the European Union, which issued the Ecodesign Preparatory Study on Compressors (ENER Lot 31) in 2009, and the DoE Office of Energy Efficiency and Renewable Energy (EERE).

    Industry groups, such as the European Association of Manufacturers of Compressors, Vacuum Pumps, Pneumatic Tools and Allied Equipment (Pneurop) and the Compressed Air & Gas Institute (CAGI), drive the adoption of uniform, voluntary standards and provide many services, including research, education, information gathering and distribution and training to end users.

    These efforts are designed to increase the overall energy efficiency of compressed-air products on the market while promoting co-operation, awareness and compliance with industry standardisation.

    Although the scope of US standards for air compressors has only begun to take shape, industry groups agree that the end result of this energy standardisation will likely be the promotion of minimum efficiency standards, product-testing procedures, certification and enforcement of standards and energy-efficiency labelling for air compressors. These anticipated changes will drive research and development teams to push the boundaries of efficiency with innovations in compressor technology as well as systems improvements, proactive service strategies and maintenance offerings for compression systems.

    New compression solutions are already coming to market to help manufacturers significantly reduce their energy costs. For example, Ingersoll Rand recently introduced their Next Generation R-Series line of rotary-screw compressors that improve energy efficiency by up to 16%.

    Good for business
    Manufacturers are motivated to gain a competitive edge by delivering greater performance and energy efficiency. However, when it comes to compressed air, energy efficiency cannot come at the cost of reliability because plants depends on a reliable source of power to maintain their productivity. This evolution within the industry leads to numerous queries: What can manufacturers and customers anticipate? When will they be required to comply with new energy standards and future regulations? And how can facility managers benefit from using high-efficiency air compressors to reduce costs, improve energy savings and boost performance?

    There are advanced compressed-air technologies available that are capable of providing improved performance, while reducing the customers’ energy footprint. It is important to note that these improvements can be achieved while maintaining the reliable supply of compressed air that is required for highly effective operations.

    Stricter industry standards for air-compressor systems are driving R&D teams to push the envelope in terms of efficiency

    Product innovation
    Just 10% to 20% of the energy input to a compressed-air system reaches the point of end use. The rest is converted to heat or is lost through leaks. The costs from lost energy can run into the millions of dollars for a large operation.

    To lower energy use and costs, the Ingersoll Rand Next Generation R-Series air compressor has been engineered to require less energy input and more capacity for typical applications, regardless of load. At the core of this model is an innovative air-end, which is the most vital component of every air compressor.

    Rotary screw compressors use rotating, meshing male and female helical rotors to compress air. These rotors and their housing contain the air-end, which requires complex engineering to improve, because a change to one factor can have a major impact on another. For example, changing the pressure ratio can increase internal air leakage, desired rotor speed and exhaust temperature.

    This is where expert engineering is critical and Ingersoll Rand has accomplished this by applying highly sophisticated modelling to re-design the convex and concave rotor profiles for optimised airflow.

    Today’s compressors with advanced airends enable facilities to meet their demand with smaller compressors that consume less energy. Ingersoll Rand analytics show that energy use can be reduced, and by using more efficient compressors and applying a comprehensive service programme, the total cost of ownership of the compressor can be reduced by up to 20%.

    Variable speed drive
    Rather than controlling a compressor by running the motor at full speed, and then stopping when the air has been compressed to the desired pressure, a variable speed drive (VSD) regulates the delivery capacity based on actual need, thus avoiding wasteful energy loss associated with load/no-load operation.

    The Ingersoll Rand Next Generation R-Series with VSD can save up to 35% in energy use, over a fixed-speed compressor. Operating a machine at variable speed allows the compressor to deliver compressed air at constant pressure over a wide range of capacity, up to 75% turn down depending on model and pressure rating

    With a fixed-speed air compressor, starting up the drive motor creates a huge energy draw that can be as much as 800% of the full load-running current. Ingersoll Rand’s motor and drive system limits the in-rush current to less than 100%. This significant decrease in the starting load minimises peak power charges – thus lowering energy use.

    Energy optimisation
    The design of today’s advanced air-compressor packages use computational modelling to minimise losses at the suction point and through the compression and post-compression processes throughout the machine. Reducing pressure drops cuts the energy consumed in order to raise the pressure of the suction air to the customer’s demand. Improvements in inlet valve geometry and compressed airflow paths fully leverage the new air-end design, and obtain a 15% increase in capacity for the same power consumption.

    Intelligent control
    Advanced air compressors provide additional opportunities to enhance energy efficiencies via remote monitoring. This allows users to control, manage and identify maintenance needs on air compressor systems through their desktop or laptop computers. Users can adjust compressor settings and programme compressors according to specific events through real-time clock schedules. With remote monitoring, users can make better decisions, in a more timely manner so that downtime can be minimised or eliminated.

    Air compressors that use controllers can automatically adjust settings to minimise downtime and energy consumption. The compressor automatically reacts to key parameters, such as airflow-pressure rating, operating cycle and energy consumption and then notifies users of the activity.

    In addition, air compressors with adaptive controllers continuously monitor key performance parameters and automatically adjust settings to meet a specific application’s needs. Adaptive controllers use advanced control algorithms that automatically adapt to the environment. This delivers better performance, reduced downtime risks and energy conservation, providing built-in performance analysis for a wide range of load requirements.

    Mutual interests
    As energy costs increase, facility managers in virtually every industry look for new ways to improve efficiencies while lowering costs. Air-compressor systems are vital to these industries, yet billions of dollars in the US alone are wasted each year due to inefficient systems.

    In addition to lowering energy costs and achieving greater uptime, all facilities can benefit from reducing negative impact on the environment by reducing energy consumption. Industry standards will increase energy efficiency and ultimately help manufacturers and industrial users increase their competitiveness – without compromising safety and reliability.

    While today’s energy standards are voluntary, at some future date, they may become mandated by the US Congress or the DoE, which is authorised to enact legislation. Air-compressor manufacturers are already achieving energy-efficiency and performance improvements through sophisticated engineering and advanced technologies.

    Working hand-in-hand, industry standardisation and manufacturers will pave the way toward greater future improvements in energy efficiency, optimised performance, reliability and decreasing environmental impact.

    +27 (0)11 565 8600

    Buhle Waste is a second-generation, family business that is 100% black-owned and managed. It strives to achieve excellence in all its activities within the communities in which it operates, and aims to be the embodiment of Ubuntu, knowing that it takes a community to help raise a business.

    The company is founded on the belief that homes and cities must be beautiful spaces; a love for its people and work should be fostered; and a respect for the environment is to be maintained. Buhle Waste strives for beauty, love and respect in all that it does.

    In 1997, medical practitioner Dr PD Sekete recognised that the township in which he was living was plagued by poor service delivery. Waste was piling up and rubbish heaps lined the streets – areas that had become the playground of children. Sekete’s medical practice was full of patients who were suffering from ailments caused by this waste mis-mana-gement. Dedicated to preventative health-care, Sekete committed himself to bringing efficient waste management to the townships around South Africa.

    Buhle Waste began in the dusty streets of Katlehong, South Africa, with a single truck and seven staff members, managing the waste of local communities in an effort to bring a sense of beauty and pride to their environment. Over the years, the company has gained invaluable experience through the trials of business hardships and successes. It now operates nationwide, with around 350 staff and a fleet of more than 70 trucks. Buhle Waste has offices, warehouses and treatment plants in the Gauteng, Free State, Limpopo and Mpumalanga provinces.

    Dedication to the community and respect for the environment continue to form the basis of Buhle Waste’s business operations to this day. Built into the foundations of its opera-tions is the perseverance, resilience and dedication to achieving success for its clients.

    As a business, it has continued to evolve and adapt to the changing circumstances. Like the environment it serves, the company has taken on its most resilient characteristics – innovation forms a pillar of the business’ ongoing growth and success. It continues to invest in technologies that will assist it in achieving its zero-waste-to-landfill goals, while simultaneously differentiating its value pro–p-osition in the market.

    In the early years, the business was heavily dependent on other, larger waste management companies that were involved in the treatment and disposal of waste. Today, it is one of the largest waste-management companies in the country.

    To achieve its zero-waste-to-landfill vision and minimise its environmental impact, Buhle Waste has invested in green technology that has zero emissions and reduces waste from treatment to disposal at landfill. Its commitment to environmentally sustainable technology and ensuring that the benefits are seen throughout the country is further highlighted in the company’s investment in treatment technology at its flagship treatment site in Seshego, Limpopo.

    The converter is a revolutionary technology that, using friction from rotating shredder blades in a sealed chamber, generates heat to sterilise and destroy dangerous waste, rendering it non-hazardous. The machine reduces the original input by about 70% in volume and 60% in weight. The waste by-product retains a calorific value that is greater than that of coal, enabling the company to explore ways in which it can be used to generate energy. Waste is converted into a refuse-derived fuel (RDF) that presents a wealth of opportunities on a continent that is energy starved.

    Currently, Buhle Waste is piloting the use of this RDF as an energy source within various industries. The technology is an essential component in the company’s mission of achieving zero-waste-to-landfill by 2025.

    From left: Nkoko Sekete (regional manager), Phetole David Sekete (founder and CEO) and Thabang Sekete (business development manager)

    The company manages general, industrial, hazardous, chemical, sanitation and medical waste. And because it manages multiple waste streams, this makes the company an ideal partner for businesses that manage their waste on-site – clients are able to leave their waste for Buhle Waste to handle while going about the business of serving their own clients. It’s a partnership that ensures the clients’ success because they are not overly encumbered by the burdens of their waste.

    It is Buhle Waste’s mission to achieve its zero-waste-to-landfill goals through the investment in technology and its people. It’s imperative that the company, as a collective within its communities, collates resources and intellect to achieve the great positive impacts of beautifying communities and ensuring environmental sustainability.

    The initiatives it undertakes in the communities combine the resources of companies to address the immediate needs of underprivileged young adults, especially women, and provide environmental protection solutions to ensure there are no negative unintended consequences for our environment.

    Additionally, the company provides scholarships to students who wish to study towards achieving environmental and community sustainability and excellence. It has further introduced a graduate recruitment programme to engage the youth in economic participation and encourage future leaders to remain cognisant of their contribution to environmental sustainability. Buhle Waste needs the help of the community if it is to achieve our zero-waste-to-landfill objectives. The pillars of its business will operate in a synergistic fashion to ensure it continues to hold true to the Buhle Waste values of beauty, love and respect.

    Tel: +27 (0)11 595 3000, Fax: +27 (0)11 866 2321

    The B2Gold Otjikoto mine in Namibia will soon be powered by a high-performance PV solar energy solution from Barloworld Power. The first phase of the project will supply the mine with 7.061 MWp of PV solar capacity, making it one of the largest solar installations in the country to date.

    Awarded to Barloworld on 9 June 2017, the project includes 62 400 Cat Thin Film PV modules in a ground-mounted single-axle tracker structure with mounting tables.

    The installation incorporates AC combiner boxes, step-up transformers from 1 000V to 6.6 kV, 6.6 kV MV switchgear, and a 3.3 km 6.6 kV distribution line. The thin film PV solar energy panels are manufactured by First Solar, a global leader in PV solar energy solutions, with more than 13.5 GW sold worldwide. These Cat-branded panels offer improved performance over conventional silicon solar panels.

    As Caterpillar’s Southern Africa dealer for power systems, Barloworld Power is supplying engineering, procurement and construction services for the project.

    The PV solar system will tie into the mine’s existing reticulation system using a Cat microgrid master controller (MMC). Barloworld Power project manager, Jac Hough, who is responsible for the contract, says the use of a Cat MMC to integrate the PV solution with the existing mine power plant to save fuel is unique in the Southern African mining sector.

    Hough says Otjikoto’s power is currently supplied solely by four Cat 5 MW heavy fuel oil generators, supported by three back-up Cat diesel generators.

    The Cat MMC ensures loads are continuously energised by selecting the highest-quality power at the lowest cost. It manages the flow of energy from every source in the system, including the main grid when connected. In addition, the MMC uses Cat Connect technology – this enables real-time communication of on-site performance data, which can be monitored as well as analysed remotely.

    Once the new PV solar plant is fully commissioned in April 2018, solar power will be used to reduce reliance on the current power source, with significant savings in maintenance and fuel costs.

    The mine is exploring the viability of future expansion of the solar plant, for which infrastructural provisions have already been made. The mine will also study the option of linking into the local NamPower grid to effect further reductions in its power costs.

    Barloworld Equipment’s Isando campus is the first facility in Southern Africa to make use of Caterpillar’s PV technology

    The B2Gold award follows the outstanding application of new technology at sister firm Barloworld Equipment’s Isando campus, in South Africa. This highly successful test site marked the first application of Cat Thin Film PV solar energy in Southern Africa. 

    It provides the campus with 47 237 kWh of renewable power per month, with estimated savings of ZAR793 590 on its annual energy bill. What’s more, it reduces carbon emissions by 594 tons per annum.

    Caterpillar’s solar PV system offers reliable and predictable energy in all climates and applications, with the modules independently tested to pass accelerated life and stress tests beyond industry standards.

    The solar PV offering is a key component of the Cat Microgrid technology suite – an innovative line-up of power systems that adds environmentally friendly solar panels, energy storage, and advanced monitoring and control systems to Caterpillar’s traditional line of power-generation equipment.

    This includes heavy fuel oil, natural gas, biogas and diesel generator sets, switchgear and automatic transfer switches.

    The Cat Microgrid technology suite is designed to lessen fuel expenses, lower utility bills, decrease emissions and reduce the total cost of ownership while increasing energy efficiency in challenging environments.

    According to Louis Botha, sales manager at Barloworld Power, the PV solar technology is not only cost-efficient and environmentally friendly but can also be fully integrated with other Caterpillar power technologies.

    Tel: 0860 898 000

    There is a need for more lawyers that are able to represent the growing energy sector, be that in environmental practice or regulatory compliance and downstream project agreements, says Barrisford Petersen, BBP Law founder and MD. ‘This is a landscape that is going to be in constant flux, given the constant development of new technologies in the energy sector, which makes this aspect of the law very compelling.’

    As devoted as he may have been over the past few years, in presenting a strong argument for oil and gas to have its own legislation and, therefore, be removed from the Mineral and Petroleum Resources Development Act (MPRDA) of South Africa, Petersen has decided to diversify the BBP Law practice and include the whole energy sector in the provision of legal services.

    ‘The writing was on the wall even as far back as 20 years ago,’ he says. ‘The oil and gas industry has been through innumerable difficulties, and as long as it remains regulated in its current manner under the MPRDA, we will not be considered by multinationals as a viable investment destination for exploration, let alone production.

    ‘With proposals and amendments on the table for the past four years, we are no further from the starting point.’

    Such frustration has provided new opportunities for BBP Law, and Petersen is excited by the addition of energy to its portfolio of specialised legal services. With energy matters reflected more today, given worldwide calls for reductions in carbon emissions and growing power demands, South Africa’s environmental acts appear to be more concise and appropriate, providing the legal profession with improved clarification and clearer interpretation than the MPRDA.

    Following recent appointments to the legal panels of the Department of Public Enterprises, Saldanha Bay Municipality, PetroSA, Engen, SA Forestries Company Limited and the Independent Electoral Commission, there is now a need for BBP Law – with its team of bright, young lawyers and the support of more seasoned attorneys – to focus its presence and activities on the instructions of these panel appointments, so that they can grow in experience.

    With diversification into energy, the practice has employed a number of newly qualified lawyers who, together with Petersen’s son, Brent (who was recently admitted as an attorney), are well set to service this sector and BBP Law’s expanded legal services.

    ‘Our senior attorneys are mentoring and developing the juniors, and I see them advancing our diversified portfolio of legal services.’

    While oil and gas remain his passion, right now Petersen is content to focus on ensuring a good, diversified legal practice, ‘one that works in resources’ and has a reputation for advancing the views of his clients within the parameters of regulation.

    If this means he needs to pick up his sword and challenge the country’s energy policies as he does with oil and gas, he will do so, ‘as often as it takes to ensure we have legal frameworks that our investors and clients – both local and international, can work within’, he says.

    Petersen adds that there is lots to be excited about in terms of how power could be generated in South Africa in the future, even currently. ‘There are very stimulating opportunities, not least of which is the importation of liquefied natural gas [LNG].’

    LNG projects have the capacity to underpin exploration and production of indigenous gas, which could alleviate South Africa’s dependence on coal. The proposed LNG-to-power programmes will have at least two industrial ports producing some 3 000 MW that would be sold to the national grid supplier Eskom, which will alleviate, if not solve extensively, the energy demand-versus-supply failures that it has been experiencing over the past decade.

    ‘LNG development has been offered to independent power producers and, should trajectories prove true, by 2040 LNG-to-power expansion will lead us into shale gas and deepwater offshore field creation,’ according to Petersen.

    Shale gas, however, comes with its own set of problems. ‘While there have been uncertain legislative delays in the commitment to shale gas exploration, we need to keep pushing this. Largely the challenges relate to environmental impacts, and highlight the concerns of action groups – like the Karoo Action Group – that oppose shale-gas mining through fracking, in particular the consequences of which are cited as harmful public health issues.’

    Petersen says that, fundamentally, the base building blocks to solving these problems lie in legislation and how to mitigate environmental risks at grass-roots level.

    ‘If there was lots more investment in shale gas right now, the landscape would be very different because legislators would be under pressure to push for amendments,’ he says, adding that it’s similar to the oil and gas predicament. ‘If regulations are enabling, investment would be flooding in. In some ways, shale gas is like the icing and the cherry on a cake, but without the cake itself.’

    Further compounding the dilemma is that the cheapest form of energy delivery in the country currently is coal, but as Petersen points out, the majority of countries that advocate for the non-use of the commodity are those that have environmental challenges, and ironically may have already over-utilised the resource.

    ‘I believe that given we already use coal effectively to generate energy, and should we begin to manage it more effectively, we can continue to use this abundant resource and realise cost-effectiveness. But the country is a signatory on mitigating carbon emissions, and rightly so. Therefore I’m not sure how we can solve this problem.’

    Which brings us right back to gas. ‘The best form of domestic energy in terms of environmental impact is gas. It is obviously always better to source your commodity locally than to bring it in, but this takes us into the regulatory framework debacle, which I have been fighting for decades and will continue to do. It’s a catch-22 – we just keep going around and around.’

    Petersen believes the solution lies with having independent oil producers partnering with the state through a hybrid of production-sharing contracts. The incentives, he says, will allow more royalty income and tax relief. He provides a simple formula, and one that he has presented to the relevant authorities many times.

    ‘Exploration can be encouraged by permitting a greater and/or accelerated cost recovery, and the oil barrel split can be negotiated between the oil company and the government. What is then being given away is a proportional share of the barrel and not a national heritage. The state will always own its resources.’

    This formula mimics that of many African countries that have separated oil and gas from their mining legislation, so it’s not that South Africa doesn’t have case studies it can refer to. It’s a fact too, according to Petersen, that many multinationals seem to prefer operating in other African states where there is a good fit in the fiscal regime for their exploration activities.

    ‘South Africa is really losing out. Not only have we gone too far down the oil and gas rabbit hole in terms of legislation, but we have also been impacted as a consequence of the global oil price.’

    Subsidies would help. As it is, the government has been indirectly subsidising the production of renewable energy, such as wind and solar farms but, while this has been successful, Petersen points out that on a cost per KW, it is still cheaper to focus on gas, particularly domestic gas.

    BEE and beneficiation will also be advanced through an enabling legislative environment, let alone employment opportunities and skills development. This is an aspect BBP Law is devoted to, given its Level 1 BEE status.

    Tel: +27 21 945 1237
    Fax: +27 86 691 4998