natural gas rights
natural gas rights
Gas market given room to grow in South African energy sector

On Tuesday, South African energy minister Tina Joemat-Pettersson stressed that she would not be making any final decisions on the country’s much anticipated gas policy until she felt that the private sector has had sufficient participation in the process.

“I will not put pen to paper and add my signature to a policy if I am not convinced that the private sector has had sufficient participation in the policy making process of the Gas Utilisation Master Plan [GUMP],” Joemat-Pettersson said at a conference in Cape Town on Tuesday.

Gas Utilisation Master Plan

Joemat-Pettersson explained: “the Department has developed a Gas Utilisation Master Plan (the “GUMP”) for South Africa. The GUMP is a roadmap for the development of a gas economy. It analyses the potential and opportunity for the development of South Africa’s gas economy and sets out a plan of how this could be achieved.

“One of the key objectives of the GUMP is to enable the development of indigenous gas resources and to create the opportunity to stimulate the introduction of a portfolio of gas supply options.

She added: “The demand from the Gas to Power Programme will provide a market for a potential supply of gas. It will also provide long term gas demand sinks for future indigenous gas supplies.”

Capitalising on gas opportunities

The Department of Energy’s IRP 2013 policy did not take all fuel sources, such as gas, into consideration. The minister stated that she will amend and produce an “IRP by the second quarter of 2016, where gas plays a huge and significant role.”

Joemat-Pettersson added that: “The efficiency of gas been discussed with Angola, Mozambique in particular, Namibia and South Africa.”

The minister listed the work that the DoE is doing with the gas industry to develop and grow the market as follows:

  • Facilitating investment in the gas industry
  • Ensuring the safe, efficient, economic and environmentally responsible transmission, distribution, storage, liquefaction and re-gasification of gas
  • Promoting companies in the gas industry that are owned or controlled by historically disadvantaged South Africans by means of license conditions so as to enable them to become competitive
  • Promoting skills development among employees in the gas industry
  • Promoting the development of competitive markets for gas and gas services
  • Promoting access to gas in an affordable and safe manner

Energy security

According to the World Bank and the International Energy Agency, over 1.3 billion people are without access to electricity, with more than 95% of these people in sub-Saharan African or developing Asia.

“We believe for us to have universal access to electricity and meet our Millennium Development goals with electricity, we do need gas,” the minister stressed.

Government support

The DoE has acknowledged the need to include Liquefied Petroleum Gas (LPG) in its energy mix, to ensure that cleaner power is being distributed to households which are relying on a predominant coal based energy mix.

Joemat-Pettersson highlighted that when she announced a “ministerial determination for Independent Power Producers with gas… there is a perception that it did not included LPG, but it actually did.”

Oil and gas form part of operation Pakisa, which is managed by the Presidency which also oversees all gas infrastructure. The DoE wants to achieve gas infrastructure development with limited impact on the fiscus, the minister said.

She added that the country’s mid-term budget would not earmark money for gas developments, highlighting the need to partner with the private sector to build the industry.

Gas to power

When examining the feasibility of LPG, Joemat-Pettersson said: “In the case of LPG, refining crude oil is not the only source of supply, as the yields of LPG are quite low in refining and LPG can be produced from natural gas liquids at lower cost.

“In short, if a country is importing mainly gasoline and LPG, then a local refinery in Africa may not be able to produce these products at lower cost.

She added: “The Gas to Power Programme therefore is intended to serve as a catalyst not only for electricity from natural gas, but also to provide momentum for the broader South African economy to more widely make use of conventional (natural) and unconventional  forms of gas – including LPG.”