Mantashe pushes oil and gas drive as global tension raises fuel price risks

Mineral and Petroleum Resources Minister Gwede Mantashe has called on South Africa to fast-track its oil and gas development, citing geopolitical tension and volatile global markets as warnings against over-reliance on imported petroleum.

Speaking at the Southern Africa Oil and Gas Conference in Cape Town on Monday, Mantashe said the event was taking place at a time of growing instability in global energy markets.

“This year’s edition of the Southern Africa Oil and Gas Conference takes place at the time of heightened geopolitical tension that continues to create uncertainty and volatility in the global oil markets,” he said.

His remarks come as global oil markets remain unsettled by escalating tension involving Iran and the US, which have driven crude prices above $100 (about R1 700) a barrel and renewed concerns about potential supply disruptions through critical transit routes such as the Strait of Hormuz.

The minister pointed to the ripple effects of conflict in the Middle East on global fuel supply chains and prices, noting that the consequences were being felt far beyond the region.

“Since the onset of the conflict in the Middle East, fuel supply chains have experienced disruptions, while the under-recovery on fuel prices has continued to fluctuate,” Mantashe said.

He warned that rising global prices would probably translate into higher costs for consumers.

“While questions remain about potential fuel supply disruptions, the reality is that substantial fuel price increases are increasingly unavoidable.”

The minister noted that countries that depended on imported petroleum products were particularly exposed to the market shocks.

Mantashe said the country had been talking to energy companies to ensure stable fuel supplies. “To maintain product availability in our country, as communicated last week, the department remains in constant engagement with industry players to explore all possible supply sources.

“These engagements are aimed at ensuring uninterrupted fuel availability in the domestic market, without immediately utilising the country’s strategic reserves.”

However, Mantashe said the country’s long-term energy security could not rely on international supply chains alone. He said South Africa possessed significant hydrocarbon potential, particularly offshore but the exploration and development of that had been slowed by opposition to projects.

“However, as we emphasised during the Africa Gas Forum, the sustainable long-term solution to our challenges lies in domestic production. This can only be achieved through the rigorous exploration and responsible exploitation of our own petroleum resources.

“One of the biggest challenges facing the development of our petroleum sector remains the persistent opposition from environmental lobby groups who continue to block every oil and gas development initiative in our country.”

Geological data, Mantashe said, indicated strong prospects for discoveries. “It is now well established that South Africa is endowed with significant offshore petroleum potential, including major gas discoveries in the Outeniqua Basin.

“The Orange Basin has also emerged as a world-class frontier following significant oil discoveries in Namibia, which geological evidence suggests may extend southwards into South African waters.”

Despite the potential, he said, development had been delayed. “Regrettably, we have not yet been able to fully explore and exploit this potential due to ongoing blockages against oil and gas development in the name of environmental protection.”

Mantashe said the Constitution provided a framework for balancing environmental protection with economic development.

“Our Constitution — the supreme law of the country — explicitly states that we must secure ecologically sustainable development and the use of natural resources while promoting justifiable economic and social development.”

He said energy costs directly affected household finances and economic activity.

“The truth is that rising oil and gas prices have a direct ripple effect on the cost of living.

“The lack of access to these resources has an even greater impact, as it can lead to energy poverty, rising unemployment and the further entrenchment of poverty and inequality.”

For that reason, African countries must ensure that natural resources were used to drive development.

“South Africa, and indeed the African continent at large, cannot afford to remain poor while endowed with abundant natural resources. We must harness these resources responsibly to drive inclusive economic growth, create employment opportunities and eradicate poverty.”

The minister said the government was implementing legislative reforms aimed at unlocking investment in the petroleum sector. That included the enactment of the Upstream Petroleum Resources Development Act.

“The Act has not only separated petroleum from mining legislation but also establishes an enabling regulatory framework aimed at accelerating exploration and production of the nation’s petroleum resources.”

The regulations needed to implement the Act were nearing completion. “I can report to you that these submissions have now been considered and the relevant officials are now dotting the I’s and crossing the t’s ahead of publishing the regulations for implementation by the end of this month.”

Mantashe said the government was advancing the modernisation of the Petroleum Products Act, adding that the reforms were aimed at ensuring equitable access to the nation’s petroleum resources and supporting sustainable development, while gradually reducing reliance on imported finished products to meet domestic demand.

The establishment of the South African National Petroleum Company “will serve as the country’s champion in the petroleum sector” and facilitate meaningful state participation in the development of the country’s petroleum resources.

Progress was also being made toward lifting the moratorium on shale gas development.

“As per our previous commitment, the department stands ready to lift the moratorium immediately after these regulations are promulgated.”

Mantashe urged South Africa to act decisively as the global energy landscape transformed. “South Africa must not stand on the sidelines while the global energy landscape evolves and while our neighbouring countries unlock the value of their resources.”

“We must act decisively, responsibly and in the national interest to unlock the full potential of our petroleum sector.”