The South African government sees its offshore sector as being commercially feasible at a minimum crude price of $70/bl, according to Department of Mineral Resources and Energy (DMRE) chief economist Shonisani Manyaga.
"Our base case assumption was $70/bl of crude oil or equivalent," he said at a dialogue on the coexistence of the upstream and fishing industries in South Africa hosted by the Petroleum Agency of South Africa (Pasa).
South Africa has a marine exclusive economic zone (EEZ) of more than 1.5mn km², one of the largest in the world. The area available for offshore oil and gas exploitation is around 1.1mn km², of which around half has already been licensed or is under application.
Pasa estimates South Africa's offshore jurisdiction potentially holds up to 59 trillion ft³ of natural gas and 27bn bl of oil. Most of these are off the west coast (22 trillion ft³ and 16bn bl) and the south coast (29 trillion ft³ and 9bn bl).
Just half of these prospective barrels of oil could fully meet the country's demand of 700,000 b/d, according to Pasa.
But Pasa chief executive Phindile Masangane said the country is running behind schedule in its target to drill 30 exploration wells in the 10 years from 2014, with only seven wells drilled since then.
These include TotalEnergies' Brulpadda and Luiperd discoveries in block 11B/12B, off the south coast, which hold proven resources of 3.4 trillion ft³. These prospects could yield 560mn ft³/d — enough to generate 3,000MW — over more than 15 years, according to Pasa.
Legal battles and local opposition have stymied attempts to develop South Africa's nascent offshore exploration sector.
Last week, South Africa's high court revoked Shell's right to explore for oil and gas along the country's Wild Coast on the basis that the permit was granted unlawfully. The ruling marked a major win for environmental activists and coastal communities, as well as small-scale fishing and tourism industries, and set a precedent for other offshore oil and gas projects in South Africa.
Earlier this year, a South African high court placed an interim ban on Australian firm Searcher's seismic survey across a number of Orange Basin oil and gas concessions along South Africa's west and southwest coasts. TotalEnergies and Shell made two major oil discoveries earlier this year in the Namibian part of the Orange Basin, at the Venus-1 and Graff-1 wells, respectively. Most of the basin is located offshore South Africa.
