Energy Minister Jeff Radebe has called for a collaborative approach to attract investment in oil refining hubs throughout the African continent and has hinted that Saudi Arabian investment in refining capacity in South Africa may soon become a reality.
“In South Africa, we believe the time has come for an expansion of refining capacity in addition to the modernisation of existing [refineries]. We are working very hard to entice investment into the energy sector. We want to attract investment into a new refinery in South Africa so that we are able to ensure that we are semi self-sufficient,” he told delegates at Africa Oil Week, in Cape Town.
In response to a question at a media briefing on the sidelines of Africa Oil Week, Radebe hinted that investment in oil refining capacity may soon be unpacked.
“The President went on a State visit to Saudi Arabia in July. There was a commitment. Two officials are working very aggressively to ensure that this becomes a reality. At the right time, you will be informed about the progress. It is on the table.” he said.
During the visit by President Cyril Ramaphosa and a delegation to Saudi Arabia in July, Saudi Crown Prince Mohammed bin Salman pledged to invest at least $10-billion dollars in South Africa, mostly in the energy sector, including in the construction of oil refineries.
Speaking during the opening plenary of Africa Oil Week, Radebe said there was a tremendous need to balance oil exploration and production facilities with investment in refining capacity in Africa.
“The lack of world-class refining infrastructure continues to deny Africa the ability to benefit from the upside of their resource endowment. Importation of refined products drains foreign currency reserves in many of our countries and revenues obtained from the proceeds of exploration are used to purchase petroleum products.”
Radebe said a collaborative approach was, therefore, necessary to turn the situation around.
“We also look forward to the completion of a new megarefinery in Nigeria, which we believe will improve intra-African trade in refined petroleum products.”
The Energy Minister also spoke about the tremendous potential of oil and gas resources in Africa. Speaking during a panel discussion, Radebe said shale gas in the Karoo was still at the "very early stages of development".
“We are still finalising regulations in South Africa to have certainty.”
He told delegates that the country’s Integrated Resource Plan (IRP) envisaged a Gas to Power Programme incorporating liquefied natural gas (LNG) imports, as well as imports through pipelines. The period for comments on the IRP has now closed.
“We will consider all comments and submit the final document to Cabinet in the next few weeks for approval. This will be the main vehicle through which to stimulate this envisioned gas market in South Africa,” said Radebe.
He said gas importation would require an all-inclusive effort by government and other stakeholders in South Africa and the country's partners.
“This is one area that can accelerate collaboration between producers of the molecules of gas and consumer countries. The proven gas reserves in the African continent alone are enough to more than cater for the continent’s energy needs.
“We are convinced that recent gas discoveries in the Rovuma basin, in Mozambique, will benefit the economies of this region and further bolster regional economic integration. The prospects for coalbed methane in this country, as well as in Zimbabwe and Botswana, are an indication of the need for closer collaboration,” Radebe said in his plenary address.
He added that the government was at the final stage of consultation on the amendments to the Gas Act of 2001 to better enable greater use of gas in the economy.
He said renewable energy would also play a prominent role in South Africa, with 20 000 MW of generation capacity to come from renewable energy in terms of the country’s Vision 2030.
“We are still endowed [with] coal resources but the trend is to move towards clean energy and renewable energy . . . so we are steadfast in moving very aggressively in this direction.”
Hydropower was also on the table.
“We are looking at collaborating with the Democratic Republic of Congo (DRC). We have a treaty between South Africa and the DRC to [increase] hydropower [exports] from the DRC to South Africa. We expect that, within the next few years, we will be able to uptake 2 500 MW of hydro from the DRC.”
The DRC's proposed multibillion-dollar Inga 3 hydropower plant is expected to have a generation capacity of 11 000 MW. South Africa agreed, in a 2013 treaty with the DRC, to buy 2 500 MW of the electricity produced at the hydropower plant once it is in operation.