Oil and gas find could help SA set up sovereign wealth fund, says Mantashe
Minister of Mineral Resources Gwede Mantashe told the National Assembly that South Africa's recent oil and gas find had great potential to offer the country energy independence, economic growth and jobs.
Mantashe was addressing Members of Parliament during a plenary of oral replies to their questions on Wednesday afternoon.
Total announced during the 2019 Mining Indaba that it had found offshore gas deposits at its Brulpadda prospects in the Outeniqua basin, some 175km off the coast of South Africa.
In a statement in early February, Total said the Brulpadda well encountered 57 metres of net gas condensate pay in reservoirs, with the well reaching a final depth of 3 633 metres.
Mantashe told members that while more information still needed to emerge about the potential of the find for the South African economy, he was confident that it could reduce South Africa’s exposure to international oil price volatility.
"It is still early days to determine the full extent of this opportunity. However, there is a potential to reduce significantly the dependency on imports of oil and gas. It can also help us develop oil and gas sector into an independent and robust sector," said Mantshe.
Mantashe said a South Africa, with its own oil and gas resources, would not only be more independent of oil imports, but would have a number of mechanisms to generate capital to meet its society’s needs.
Reaching growth targets
"Once at full production at oil and gas, we could possibly reach that 5% annual growth target. It also presents a rare opportunity for us to establish a sovereign wealth fund, as seen in many oil rich countries," Mantashe said.
He agreed with Members of Parliament who raised concerns of whether sufficient local partners would be part of the exploration in the Bulpradda find, and said it was critical that the country contribute and benefit meaningfully from it.
"Transformation is at the heart of everything we do. If you look at the shareholding of the team doing the exploration, only 10% belonged to South Africa. That is why I believe we can intervene in that space by creating a sovereign wealth fund to preserve the benefits of that discovery for future generations. There is nothing more transformative than that," he said.
Responding to a supplementary question from Democratic Alliance MP James Lorimer, Mantashe said the oil and gas was currently regulated by the Mineral and Petroleum Resources Development Act, but the department would develop a legislative framework for the oil and gas sector by the time of the sixth administration.