Mineral Resources and Energy Minister, Gwede Mantashe, says Africa cannot be an import destination for refined products when the continent is endowed with crude oil.
The Minister said while major oil companies are withdrawing from Africa’s downstream sector, there have been new oil discoveries on the continent, South Africa being no exception.
“Discoveries of significant oil and gas in our neighbouring SADC member countries are encouraging. They will strengthen energy, support other by-products, such as fertilisers, to boost agricultural production. This means we must invest in beneficiation to boost manufacturing,” he said.
The Minister was addressing about 2 000 delegates at the official opening of the Africa Oil Week conference in Cape Town on Tuesday.
Africa Oil Week is an annual conference that brings together petroleum industry captains, government leaders, academia, and non-governmental organisations to deliberate on various matters in the oil and gas sector.
The weeklong Africa Oil Week conference is held under the theme, ‘Sustainable Growth in a Low-Carbon Market’.
Mantashe told delegates that Africa’s oil and gas resources can help accelerate and guarantee the continent’s energy security, and drive regional economic development through the processing and beneficiation of petroleum products.
“For a continent that consumes two thirds of her oil produce, exporting the remaining third – according to the Africa Energy Outlook 2022 Report – [this means] attempts of the European Union to move away from Russian gas imports are an opportunity for Africa’s oil and gas to earn her income through exports into Europe.”
Mantashe said imported refined products risk Africa’s economies and expose it to unreliable supply.
“They adversely force us to invest in import infrastructure, not domestic processing. South Africa has set an ambitious programme to attract local and international investment in oil and gas exploration and production. This complements our exploration strategy in mining, aimed at minerals for clean energy technologies,” the Minister said.
As a signatory to the Paris Agreement, the Mantashe said that South Africa is committed to the global agenda to decarbonise.
He emphasised that transition to a low carbon economy must include energy security, regard for human lives and sustainability, job security, and economic growth and development.
“Transition from high carbon to low carbon emission must be managed systematically. It must include support and use of gas and renewable energy, and other energy sources, while at the same time scaling down our country’s previous over-reliance on coal,” he said.
Mantashe emphasised that the meeting should therefore help the continent to forge partnerships, including government-government, and government-business.
“We should speak in one voice about Africa’s choice for her energy pathway; one that is just, is about her people, her fauna and flora, and her economic well-being. This includes food security,” he said.
Effects of ongoing Eastern Europe conflict
Mantashe said Russia’s ongoing invasion of Ukraine has proven to be detrimental to developing economies.
He said scarcity and high-energy costs, increasing food prices, and ever-rising interest rates have become commonplace.
“South Africa, like other countries, saw the cost of refined products reaching record levels. This necessitated our government to release its strategic stock, thus forgo revenue in the order of US $750 million. These developments are likely to deter investment in areas of oil and gas due to the cost of credit that could lead to risk aversion among investors.”
The Minister said this adverse reality is compounded by the pressures brought to bear by climate change and the need to decarbonise, which sits uncomfortably next to energy poverty, the urgency for improved human development, the desire for technological advance and the overall imperative to industrialise.
“In this context, the President of the World Bank recently warned that inflation, slow growth, lower productivity, higher interest rates and the drain on global energy supplies in advanced economies, likely to persist beyond 2023, pose a huge risk to developing countries. Therefore, there is a need for new micro and macro pathways, because the status quo is not an option.”