MPRDA, LNG import clarity key to establishment of gas economy

11th July 2017

By: Mia Breytenbach

Creamer Media Deputy Editor: Features

     

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Key factors that will influence the establishment of a gas economy in South Africa include the passing of the amended Mineral and Petroleum Resources Development Act (MPRDA), while greater clarity is also needed around the anticipated and stated imports of liquefied natural gas (LNG), says South African Oil and Gas Alliance CEO Niall Kramer.

Speaking at the Liquefied Petroleum Gas Africa Summit, in Johannesburg, on Tuesday, he suggested that the MPRDA, when passed, would be a key enabler for the economy, stating that South Africa is a “frontier market”, having not started any gas exploration of scale.

Kramer, however, asserted that the Act should be commercially viable and attractive to the gas industry.

“This year is a critical year for South Africa to progress in establishing a gas economy,” he said, noting that what he would like to see, by way of developing a gas economy in South Africa, is the import of LNG into the allocated three ports – Richards Bay, Coega and Saldanha.

“That, in one sense, would start a gas economy of large scale,” he said.

He cited Turkey and the US as countries that have experienced success from developing gas industries, with Turkey having increased the use of gas in its energy mix, which contributed to significant growth, while the US experienced a significant economic impact on employment, the fiscus and on gross domestic product growth from shale gas.

Similarly, Kramer believes that it is “happy hour” for LNG, as the world is “awash with LNG”. 

LPG A CASE STUDY?

He further suggested that the liquified petroleum gas (LPG) industry could play a larger strategic role in the establishment of a gas economy, with key lessons to be learnt from this industry. 

The LPG industry has been subject to study in the Competition Commission’s LPG market enquiry, with areas studied and recommendations made on aspects that include access to markets, market behaviours, pricing, as well as policy and regulatory alignments.

Kramer suggested that, for the LNG industry, there are key factors to be aware of, such as the access to markets for smaller independent players.

The LNG industry can also gain insight from the LPG market on the transportation of gas, as “all the discussions have been on transport of gas through pipelines and not through virtual pipelines or smaller tankers by way of road or rail”. The LPG industry has expertise in this area, Kramer asserted.

Other lessons to be learned from the LPG gas industry include issues around safety.

Further, scalability of the industry could merit discussion, Kramer said, noting that while the assumption is that “big is always good”, the LPG industry is a perfect example of a scalable industry.

Kramer also voiced the concern that if South Africa is to have a free and unanticipated resource that it can benefit from, the country should exploit the resource in a well-disciplined and strategic manner, with supportive policy.

He highlighted that “now is the time to start the discussion on how it will be applied”.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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