- Minister Gwede Mantashe says decreased demand for energy in the oil sector depressed the prices of crude oil and petroleum products.
- The government is working to future-proof the energy sector as well as its own power system in the midst of the Covid-19 pandemic.
- According to the minister, the state is planning to introduce a bill to Parliament to encourage investment in SA's oil and gas infrastructure.
Minister of Mineral Resources and Energy Gwede Mantashe said on Thursday afternoon that government was working with more urgency to protect and develop the oil industry and to use it as an energy source in South Africa since the start of the coronavirus pandemic.
Mantashe was speaking at a webinar of the Africa Oil Week Conference. The minister was originally slated to speak on Wednesday but postponed by a day because he was participating in government discussions on the state’s economic reconstruction and recovery strategy.
Mantashe said government was working to future-proof the energy sector as well as its own power system in the midst of the Covid-19 pandemic, which brought its own set of challenges for the South African and global economy.
"We are meeting during a difficult period where the pandemic has meant that government must put in place measures such as social distancing, remote workplaces, virtual meeting and strict hygiene in places of work," said Mantashe.
Mantashe said the decline in economic activity worldwide was accompanied by a decreased demand for energy in the oil sector, which depressed the prices of crude oil and petroleum products.
"The crude oil exporting countries bore the brunt of the low oil prices while the importing countries benefited from lower refined product prices. The low oil prices have resulted in a review of a number of planned upstream and midstream investments in the oil and gas sector," Mantashe said.
The minister said even though South Africa kept its petroleum energy industry running and at full capacity throughout the lockdown, the fall in oil prices in March as a result of an oil price war between Saudi Arabia and Russia undermined any gains the sector could have made.
"Following the nationwide lockdown, South Africa allowed the petroleum energy sector to operate at full capacity. However, the decreased demand for petroleum products forced some refineries to close. Further relaxation to lockdown regulations has led to rapid increase in demand, which resulted in shortages in some energy products, especially petroleum products," said Mantashe.
The minister reminded delegates at the Africa Oil Week Conference that since October of 2019 when the conference last met, government published the Petroleum Resources Development Bill for public comment to attract investment and ensure synergy between oil and gas activities.
Mantashe added that government planned on introducing a bill to Parliament which would encourage investment into oil and gas infrastructure.
"The Gas Amendment Bill will be tabled in Parliament, in line with the appropriate legislative process. The bill aims to attract infrastructure investment for LNG imports, increase exploration, create domestic gas feedstock, diversify the energy mix and reduce carbon emissions," he said.
He said present and future gas discoveries in our country should find their way to South Africa's power plants and other petrochemical facilities.
The minister also heaped more praise upon the Central Energy Fund's ongoing discussions with Saudi Aramco in a pre-feasibility study into a crude oil refinery in Richards Bay and Total's gas drilling rig for the Luiperd prospect off the Mossel Bay coast.