WeeklySA_AdminRESOURCE: Petroleum companies say licensing delays and policy uncertainty are holding back exploration, as rising fuel imports and looming gas shortages sharpen the need for investment…
By WSAM Business Reporter
South Africa’s petroleum industry has urged the government to resolve licensing appeals, accelerate project approvals and provide greater policy certainty, warning that investment remains constrained despite the country’s substantial oil and gas potential.
Speaking during a South African National Petroleum Company (SANPC)-sponsored panel at African Energy Week in Cape Town, industry executives identified regulatory delays and inadequate infrastructure as obstacles to expanding domestic production and strengthening energy security. The discussions highlighted a widening challenge: South Africa needs investment across its petroleum industry while becoming increasingly dependent on imported fuel and facing pressure on future gas supplies. Magali Pailhé, managing director of TotalEnergies EP South Africa, said appeals affecting offshore exploration were preventing companies from testing the country’s resource potential.
Developing domestic oil
“Today, we have blocks offshore in the Orange Basin that TotalEnergies has proven in Namibia, but are blocked in various stages of appeal. We need to unblock these so the potential can be realised,” she said.
Pailhé contrasted exploration activity in neighbouring Namibia with South Africa, saying 25 wells had been drilled in Namibia since 2022, compared with only three in South Africa since 2014.
“The industry is here, but the appeals need to be addressed to allow investment to flow.” TotalEnergies holds exploration interests in the Orange Deepwater Basin, Deep Western Orange Basin and Block 3B/4B. Pailhé argued that developing domestic oil and gas could support employment, infrastructure investment and industrial growth.
Her comments placed the handling of regulatory appeals at the centre of the industry’s investment concerns.
Exploration rights alone do not translate into drilling, while discoveries still require further assessment, approvals, infrastructure and financing before commercial production can begin.
Deputy Minister of Mineral and Petroleum Resources Phumzile Mgcina acknowledged the gap between South Africa’s resources and their contribution to the economy.
“We have the resources but have not yet converted enough of them into energy, economic opportunities and improved livelihoods. We need investment, infrastructure and policy incentives,” she said. Mgcina identified SANPC as an important instrument for advancing petroleum development and improving energy security.
Potential oil production
SANPC chief executive Godfrey Moagi outlined a strategy covering exploration, gas development, refining and distribution.
He cited estimates of 27 billion barrels of crude oil resources and between 260 trillion and 300 trillion cubic feet of gas, alongside potential oil production of 1.3 million barrels a day.
These figures describe the scale of the potential cited by SANPC; they should not be read as confirmed commercially recoverable reserves or an approved production forecast. The urgency of investment extends beyond offshore exploration to the facilities that process, store and transport fuel.
According to Central Energy Fund figures cited during the discussion, imports now supply approximately 61% of South Africa’s domestic fuel demand, up from 22% in 2019. That represents an increase of 39 percentage points and underlines the country’s growing exposure to imported supplies.
Funlola Abe Folukoya, head of trading and origination at bp Southern Africa, highlighted the need for infrastructure linking coastal import terminals with inland markets.
“Policy is a non-negotiable and is absolutely required to unlock the investment needed in the downstream and fuels market,” she said. Folukoya said inconsistent implementation and regulatory misalignment continued to affect long-term investment decisions. The company recently secured a 25-year agreement covering operations at Durban’s Island View Terminal.
ADNOC Distribution chief executive Bader Al Lamki also called for transparent policies responsive to changing market conditions.
His comments followed the company’s agreement to acquire Shell Downstream South Africa at an implied enterprise value of approximately $1 billion — roughly R16.5 billion. The proposed transaction remains subject to regulatory and other conditions, with completion expected in 2027. Enterprise value measures the business’s overall value; the final equity consideration is subject to adjustments for net debt and working capital.
Gas supply emerged as another pressing concern. ExxonMobil’s South Africa business development executive, Anish Patel, warned that declining pipeline gas supplies from Mozambique, coupled with increasing demand for gas-fired power, could widen the country’s supply deficit.
Funding for infrastructure
With national gas demand potentially more than tripling by 2050, Patel identified liquefied natural gas imports as an important supply option.
ExxonMobil recently signed a heads of agreement with Zululand Energy Terminal to advance a proposed LNG import facility at Richards Bay. Patel said predictable policy frameworks were essential to securing the investment required.
Financing could help address some of the infrastructure constraints.
Afreximbank’s Southern Africa client relations representative, Andrew Masuwa, pointed to the bank’s $14 billion South Africa country programme — approximately R231 billion — as an opportunity to mobilise funding for refining and infrastructure.
The programme supports broader industrial development and trade; its full value should not be interpreted as money allocated exclusively to petroleum projects.
Citing refinery investments in Nigeria and Angola, Masuwa said South Africa had scope to rebuild domestic processing capacity and reduce import dependence
