Fellow Ministers and Deputy Ministers present

Representatives of the oil and gas industry

Organisers of the Congress

Delegates and fellow speakers

Ladies and Gentlemen

Let me thank the organisers for affording me the opportunity to address this Congress.

You may be aware South Africa is well known for its vast mineral wealth, which has been explored and developed for over 100 years. Through the promulgation of the Mineral and Petroleum Resources Development Act, 28 of 2002 (MPRDA) we are able to realise equitable access to mineral and petroleum resources, and to further ensure that they benefit all South Africans.

Our mineral resources are a major contributor towards our GDP, and we hope to augment this contribution with our petroleum resources, a relatively new sector in the South African context. A new Mining Rights Act was promulgated in 1967, allowing for the first offshore exploration license to be issued to a few companies at the time, which later gradually dwindled to a single State Owned Company due to the political climate which existed at the time. This has thus been a nascent industry that requires patience and steady guidance through regulatory and other means in order to reach the desired levels of growth and maturity.

The expected imminent finalisation of amendments to the MPRDA will provide the necessary guidance to build on what has been achieved in the past. The Bill, which is going through the Parliamentary processes at present enhances provisions relating to petroleum development in order to secure a win-win mechanism as the process for development evolves. The enhancement of these provisions was inspired by Operation Phakisa: Oceans Economy initiative by President Jacob Gedleyihlekisa Zuma. It is anticipated that this initiative will drive forward the development of petroleum resources and provide necessary fiscal and socioeconomic benefits such as improving the balance of payment, community development, skills development, job creation for the benefit of South Africa and particularly citizens who are in close proximity to the operation, and contribute to the country’s broader socio-economic objectives.

Currently in the entire offshore area there are now over 300 exploration wells including appraisal and production wells drilled. In addition more than 300 000 km of 2D seismic data and 40 000 km squared of 3D seismic data have been acquired since exploration began offshore. This exploration has resulted in the discovery of several small oil and gas fields, and the commercial production of oil and gas from the Bredasdorp Basin. In the Pletmos Basin there are two undeveloped gas fields and a further six gas discoveries and one oil and several gas discoveries have been made in the South African part of the Orange Basin.

South Africa has recently adopted a decision to pursue the exploration of shale gas resources in the Karoo basin which is estimated to have 390 trillion cubic feet (Tcf) in unproven technically recoverable shale gas resources according to the United States Energy Information Administration. It is expected that the development of this gas will contribute positively to our economy, in diversifying our energy mix and the development of other support industries, as an example.

Like all processes of exploration and development of mineral and petroleum resources there are inherent impacts to the environment and communities that may be closer to operations, however, these can be mitigated against. A cautious approach has been adopted by Government, through imposing a moratorium on the processing of applications. This was followed by the initiation of a technical study of the use of hydraulic fracturing in the development of shale gas resources. This is to ensure that the process is undertaken in a responsible manner, having regard to the technical nature of the exploration process, environmental and water impacts as well as socio-economic impacts of its development. Furthermore, to ensure that the necessary regulatory and enforcement tools are put in place in anticipation for licensing and further development of this industry.

There is an urgent need for South Africa to ensure that our economic development goals remain viable and sustainable through the provision of constant energy resources, while maintaining a balance with the threat to the environment. The exploitation of shale gas resources can provide this balance and contribute to our national growth imperatives as we strive for radical economic transformation.

I thank you.