/ 2 March 2022

Oil and gas firms ‘harassed’ out of South Africa, Gwede Mantashe says

South African Oil Tanks As Companies Scour Market For Storage Solutions
(Waldo Swiegers/Bloomberg via Getty Images)

Oil and gas firms that recently made oil discoveries off the coast of Namibia have been “harassed” out of South Africa because it wants to be an “island of angels in a sea of poverty”, mineral resources and energy minister Gwede Mantashe said this week.

“It’s the most dangerous strategy for us in South Africa,” he told the African Energy Indaba in Cape Town on Tuesday.  “Shell, we chased out …of the Eastern Cape and it goes and makes a huge find next door in Namibia … Eni, we chased out in KwaZulu-Natal, they went to Côte d’Ivoire and made huge oil finds … I’m sure if we do that exploration we’re going to be a different country.”

Last month, Shell lost its bid to appeal an interdict granted to Wild Coast small-scale fisher communities opposed to its 3D seismic survey, while on Tuesday, the Western Cape high court granted an interdict in favour of fishing communities on the West Coast against Searcher Seismic’s survey operations. The Australian-based firm has now indicated that it is abandoning its controversial project to search for oil and gas deposits under the seafloor and that its survey vessel is “demobilising” and leaving South Africa immediately. 

Mantashe said Namibia’s discoveries are a “massively welcome impetus for development in the country, but “also for us on the tip of the continent and for our


‘Africa We Want’

He said the African Union’s vision to create the “Africa We Want” aspires for a prosperous Africa, based on inclusive growth and sustainable development. “For the aspiration to be real, the goal of transforming our economies involves prioritising industrialisation, economic diversification and resilience, and investment in energy resources and capacities. This is the Africa We Want.”

This vision, he said, arises from the continent’s wish to catch up with industrialised societies and “overcome the stigma of socio-economic hardships often used stereotypically to characterise our continent.

“I’m raising this issue because even in the debate on energy we are expected to fast forward into where developed economies are as if we can reach that stage without travelling the journey,” he said.

According to the World Bank, in 2023 the GDP of sub-Saharan Africa will be 4% lower than pre-pandemic forecast estimates, he said.

Ukraine and rising price of crude 

The “present situation in Ukraine threatens our already battered economies,” he said. Of immediate effect is the rising price of crude that translates in severely high fuel prices for our individual countries. The relief on fuel taxes, announced by the government in last week’s budget, is already “corroded” by the petrol costs.

“We’re in a department that is blamed for all the ills. When the price of crude moved and reached $100 a barrel, we didn’t read that in the research, we met it in the pump because we don’t have our own oil, we import it. Then when it is shooting up because of the conflict in Ukraine, we pay the price at the pump. The present situation, therefore, is affecting us directly,” Mantashe said.

The biggest challenge confronting Africa is energy poverty, despite the

abundance of individual countries’ energy resources, including mineral resources

that are “catalytic” for a low carbon and environmentally sustainable world. “All the minerals of the future that will play on the green transition are found in South Africa,” he said, “therefore energy and mining are intertwined”.

Energy consumption in Sub-Saharan Africa, excluding South Africa, is below 30GW, which is comparable to energy consumption in Argentina alone. “Energy poverty is a concept that we hardly talk about. In the modern discussion on energy, we always aspire to move to cleaner energy and all those terms, but in the continent the biggest problem is energy poverty.” 

‘Africa at bottom of pollution barometer’

The Africa We Want, he said, must be shaped against the backdrop of global commitments towards net zero carbon emissions. Individual African countries, with minimal resources, continue to carry the devastating consequences of climate change. “This, despite our economies not being major polluters and contributors to global degradation … We are expected to move quickly towards a low carbon emission era despite the fact that the actual accused in this case are the developed economies. Africa is at the bottom of the pollution barometer.”

The just energy transition must aid development and address historical inequalities, “not undermine, and exacerbate them.

“We must not be ambivalent about the just energy transition debate. The assumed

pendulum swing, or what others call ‘accelerated transition’, intent on replacing one

system with another in a flash, is both irrational and dangerous … Many of us talk about moving from coal to renewables. It can’t be a pendulum shift. It means a balanced approach and a mixture of technologies.”

The overall response, he said, must be a fair, balanced and inclusive transition. At its centre must be the people and their livelihoods. The transition resets present economies, changes the nature of industries; gives newer logics to jobs and skills sets required. 

Energy transition

“We … need to engage with this reality in a pragmatic manner, and refocus the debate away from the narrow techno-determinist view to one that focuses holistically on what this means for developing African societies,” he said, adding that Africa must define its own just energy transition that will economically empower and

enable the continent to grow. 

His department is finalising its policy inputs on the Just Transition Framework for the energy and mining sectors. “The bias is towards mitigating the expected socio-economic impacts on our mining and energy communities. It emphasises re-skilling of workers as well as creating alternative economic livelihoods for the communities surrounding such energy utilities and mines.”

‘Killing exploration’

Mantashe said uncertainties in the global supply and security of petroleum resources provide greater resolve for African countries, like South Africa, to own refinery infrastructure capacity to guarantee national security. Last month, Shell and BP announced they were pausing the Sapref refinery.

“We are very worried that a number of energy companies want to close refining capacity and replace it with import depots. We need that refining capacity as a country, yes we’ll import part of the product, but we must have refineries,” he said, adding that many other African countries are facing similar realities. 

Africa’s governments must create conducive environments for infrastructure

development. “It is important that we create an environment for ease of doing business in Africa, across the spectrum of upstream, midstream, and downstream.

“Africa should be a global trailblazer on renewable energy. Our continent has all the

minerals required to drive meaningful development at a fast pace. 

“The drive to kill exploration in downstream energy oil and gas is … going to slow down development. Our oceans, particularly in the Western Cape, to a lesser extent in the Eastern Cape and a lot of it in KwaZulu-Natal, are the potential next growth point in energy, growing to be a sector on its own.”