Africa Oil Week — Mantashe says oil and gas could boost SA’s economic growth to 8%

8 Oct 2024

Minerals and Petroleum Resources Minister Gwede Mantashe told the Africa Oil Week conference on Tuesday that developing an upstream hydrocarbon sector could lift South Africa’s economic growth to 5%, even 8%.

Mantashe was in a typically feisty spirit at the conference, decrying the “crusade” against fossil fuels in South Africa while claiming that the sector held the elixir for much faster rates of economic growth.

Referring to the Upstream Petroleum Resources Bill that awaits President Cyril Ramaphosa’s assent, Mantashe said it would “boost the country’s economic growth to 5%, even to 8%”.

Mantashe pointed to neighbouring Namibia, where massive hydrocarbon discoveries by Total and Shell are seen as game changers. Namibia is not yet an oil producer but exploration activity in the sector saw the country revise its economic growth forecast for 2024 to 4.0% from 2.9% previously.

The estimate of up to 8% will raise eyebrows, but oil and gas booms can certainly lift economic growth, even if this does not translate into wider prosperity. For example, Guyana has seen its rates of economic growth surge to more than 60% because of oil.

Rough seas

Exploration in South Africa has encountered rough seas — in some cases, literally. Several years ago TotalEnergies (Total), for example, abandoned its first offshore drilling attempts because of mechanical failures caused by mean currents.

The industry has also faced numerous protests and legal challenges from environmental groups, and Mantashe reiterated his view that such NGOs had an “anti-development” agenda and should reveal their sources of funding.

But the government has also been accused of muddying the policy waters and trying to drive bargains that make no commercial sense.

It recently emerged in a parliamentary briefing that French energy giant Total pulled the plug on the Brulpadda and Luiperd offshore gas projects because it could not reach an agreement with PetroSA and Eskom over pricing.

Read more: TotalEnergies pulled out of Brulpadda-Luiperd gas projects over pricing, parliamentary committee told

Mantashe rejected suggestions that Total had lost confidence in investing in South Africa.

“Contrary to the view that suggests that Total’s withdrawal from the block is tantamount to lack of confidence, it is encouraging that the company is a major shareholder in three blocks north of South Africa’s Orange Basin in the deep to ultra-deep waters, and a 100% shareholder of another larger block,” he said in his prepared remarks.

“Total is not exiting South Africa. They are leaving a deposit in a difficult terrain,” Mantashe said later during a media Q&A.

On other matters, he said he and three other ministers were in discussions about the fuel price formula and levies, and the role of the Road Accident Fund on this front, but did not provide details. There have long been calls for a new model to be adopted to reduce the price of petrol at the pumps, and the fact that there are talks will be welcomed.

Also for the record: while Mantashe is Minister of Minerals and Petroleum Resources, the department will still be called the Department of Mineral Resources and Energy until March.

And a senior department official told Daily Maverick on the sidelines of the conference that the quarterly updates pledged by Mantashe last week on the progress of reducing the applications for mining and related rights would begin before the end of October.

Read more: Transparency win — Mantashe commits to regular updates on mining applications

Hopefully, this pledge of transparency for the mining sector will be extended to the petroleum sector. DM

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Rough seas