Interest in oil and gas exploration, both offshore and onshore, in South Africa is set to spike over the next five years, with improvements in technology and a need for an alternative to the unstable Middle East providing more opportunities locally, says Petroleum Agency SA (Pasa).

Pasa resource evaluation manager Dave van der Spuy says he has seen a ‘dramatic’ interest and increased commitment for exploration on the West Coast, South Coast and East Coast, with great prospects for shale gas in the Karoo basin.

“There is a very vibrant upstream industry in South Africa, with more than nine seismic acquisition programmes over the last few years. Companies have spent tens of billions of dollars in exploration,” he told a recent oil and gas stakeholder meeting in Parliament.

Van der Spuy said a major risk for more unconventional energy sources such as gas, was the ability to produce it economically.

Factors influencing risk in the gas sector in South Africa, he said, included whether the regulatory regime was stable, markets, engineering and technological capability.

Van der Spuy cautioned that while rewards could be great in exploration in oil and gas, the stakes were still very high.

He told Parliament’s Portfolio Committee on Energy that 21 wells were drilled in the North Sea before there was a discovery, while current exploration success rates for conventional resources were around 25% in geological terms, not commercial.  He said commercial success usually required further drilling.

But the committee heard that the rewards could be handsome – not only for the country in which gas was discovered.

Anadarko South Africa MD Marek Ranoszek said at the meeting that the spin-offs from the discovery of 100-trillion cubic feet of recoverable natural gas in Mozambique had led to a $550-million spend in South Africa, mainly on engineering, security, aviation and other support services.

South African Gas and Oil Alliance CEO Ebrahim Takolia, who was also present, said engineering support services were worth R20-billion in South Africa. He anticipated that this could grow to R80-billion, given more discoveries, refinery upgrades and an increase in servicing the oil and gas industries of other African countries.