Second Gas Discovery In South Africa – Will Money Filter Down?

Brulpadda, the South African gas field discovery in 2019 is cause for excitement in the petroleum world. Moreover, Wednesday’s announcement of a second gas field is adding to that. Importantly, the new well drilling uncovered gas condensate at 3,400-meter depth. And, this is the most important discovery in sub-Saharan Africa this year.

Second gas discovery

South Africa’s second gas discovery is good news for South Africa. Or is it? Effectively, the tax revenue it may generate can set the country firmly back on track. However, South African citizens’ current sceptical view of their government means Joe Public is not taking much notice. Interestingly, love or hate him, the people of Libya were looked after by Muammar Gaddafi, former Libyan leader, with Libyan oil money. Hopefully, South Africans will receive the same treatment.

Interestingly, the largest shareholders are Total International, Qatar Petroleum, CNR Petroleum and Africa Energy Corp. Moreover, an existing oil refinery in Durban is set to close its doors in 2023. South Africans want to know why? Especially, as it seems Qatar is currently building a new one further down the coast.

Mozambique’s gas fields bring trouble

Furthermore, to date, South Africa appears to be dragging her heels in assisting Mozambique to protect their gas fields. Seemingly, gas discoveries are accompanied by disruptive Islamic forces. Moreover, they have issued a warning to South Africa to stay out of Mozambique or face destabilisation at home.

Maybe, gas as an alternative source of energy could help South Africa. Undoubtedly, no one in South Africa is excited at the thought of Eskom managing such resources. Indeed, given the current track record of SOE’s, taxpayers rightfully worry that they will fund yet another cumbersome state machination of bungling and theft.

Africa Energy Outlook 2021 of the African Energy Chamber

Reportedly, the African Energy Chamber predict this discovery positions Africa as an attractive investment point. Indeed, they refer to the southwestern coast of Africa as “home to perhaps the most anticipated wildcats globally. The prospects, if successful, could open new basins for development and trigger big new investments towards the latter half of the 2020s.”

Certainly, the discovery could be the answer to post COVID-19 South Africa economy. But, current conditions for investment and growth in South Africa are onerous. Undoubtedly, the government will need to relook at this if the money is to filter down into the economy. And,  labour law may well have to be revisited.

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