Page 8 - DMEA Week 04 2021

DMEA POLICY DMEA

“No clear route” for South Africa’s

offshore gas: GlobalData

SOUTH AFRICA GLOBALDATA has raised doubts that recent the country of its near-term gas shortage chal-
gas discoveries off South Africa can be devel- lenge,” Ward said.
But the challenges are oped, warning that the finds have “no clear route South Africa covers around 80% of its gas
not insurmountable. to commercialisation.” demand with piped supplies from Mozambique,
France’s Total made the play-opening Brul- the analyst said, estimating their cost at $6-7
padda gas and condensate discovery at South per 1,000 cubic feet ($212-247 per 1,000 cubic
African offshore Block 11B/12B in February metres). Despite these concerns, GlobalData
2019. It followed this up with another “signif- said this made gas from Brulpadda and Luiperd
icant” find at the Luiperd prospect in October attractive, with a breakeven cost of only $3 per
2020. These successes have generated greater 1,000 cubic feet. LNG would probably be priced
interest in South Africa’s offshore potential. higher.
However, GlobalData said that while Total’s South Africa’s Mossel Bay gas-to-liquids
finds were potentially transformational for (GTL) plant is running out of feedstock because
the country, the question of how they could be of domestic fields reaching depletion. But it is
developed was still unanswered. unlikely that the offshore gas could be developed
“Development of South Africa’s newly dis- fast enough to save the plant from closure. An
covered gas resources faces competition from alternative option could be LNG regasification.
established imports flowing from Mozambique, South African authorities have indicated that
LNG regasification and a currently unclear the launch of production at 11B/12B is at least
domestic gas outlook,” GlobalData Analyst five years away. In the meantime, the government
Conor Ward said. is working on its Upstream Petroleum Resources
In order for the gas to be developed, South Development Bill, which it expects to pass this
Africa would need to significantly expand the year. The legislation will provide extra incentives
role of gas in its power generation, which is cur- for developing domestic gas resources.
rently mostly coal-based. This could involve the Naturally, the more gas found offshore the
conversion of diesel-fired plants to run on gas better. Junior explorers New Age Energy and
and continued investment in gas infrastructure. Tower Resources have secured a licence exten-
“The hurdles to development for Brulpadda sion in December for the Algoa-Gamtoos area
and Luiperd are not insurmountable, but timing adjacent to 11B/12B, while Royal Dutch Shell is
will be a key fact determining a path to monetisa- set to farm into the Transkei and Algoa blocks
tion, as the discoveries will be unable to alleviate held by Impact Oil & Gas. ™

Source: Total

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