Mantashe calls for bold oil and gas exploration to boost South Africa's economic growth

Minister of Petroleum Resources and Energy, Gwede Mantashe, has called for an aggressive push to explore fossil fuels and monetising South Africa’s indigenous resources in a bid to plug the national fiscus and grow the economy by an average of 5%.

South Africa has not been able to exploit its oil and gas potential to its fullest on the back of legal challenges and litigation raised by local and international environmental groups.

Speaking at the opening of the 4th Southern African Oil and Gas Conference in Cape Town on Wednesday, Mantashe said the fact that the Budget had to be revised for the first time in the history of the democratic government because parties did not agree with the proposed increase in VAT amid a tax revenue shortfall, highlighted a myriad of challenges that negatively affect inclusive economic growth and employment creation.

Finance Minister Enoch Godongwana eventually tabled a revised Budget last week with the VAT adjusted from an initially proposed 2 percentage point to 0.5% increase in 2025 and another 0.5% increase in 2026. 

Mantashe said the exploration, extraction and monetising of South Africa’s indigenous oil and gas resources could be a game changer that will bring more revenue to the fiscus, and eliminate the need  to consider raising taxes.

He said South Africa was endowed with an abundance of energy sources which need to be commercialized to drive inclusive economic growth, job creation and development. 

“Gas and oil have played second fiddle to other energy sources for far too long in our country and on the continent. This has often resulted in foreign NGO’s wanting to veto development. This is not correct as we see how these energy sources continue to drive development and industrialization elsewhere,” Mantashe said.

“The main focus has primarily been on renewables. While we diversify our energy sources to future-proof our development, we will aggressively pursue oil and gas, coal and renewables.

“The country needs to secure a supply of diverse energy sources. As the government, we are committed to a mix of energy sources that will enable and accelerate development in the country. 

“As we reported previously, the last decade has seen increased interest in South Africa’s oil and gas blocks, and gas companies are acquiring new geophysical data, in-depth basin analysis, and to a lesser extent drilling of exploration wells. We’re encouraged by companies which continue to drill exploration wells. Such bold risk-taking and investment will be rewarded.”

Mantashe pointed to major discoveries off the coast of Namibia that extend southwards into South African waters, saying they had shown that the region has substantial unexplored reserves and has drawn great interest from major petroleum companies. 

TotalEnergies, Shell and Galp have made eight discoveries across three blocks in Namibia’s Orange Basin, representing an estimated 3.5 billion barrels of potentially recoverable oil.

“The South African government wants accelerated oil exploration in the country’s waters, we believe developing the country’s oil and gas resources could boost the country’s economic growth rate to 5% and possibly 8%,” Mantashe said.

“The Gas Master Plan is designed to complement existing energy policies and contribute to an integrated energy planning approach for the country as outlined in the updated Integrated Resources Plan. It provides a framework for the role of natural gas in the energy mix and gives policy direction to industry.

“We have also noticed that Europe is looking to Africa to diversify its gas supplies. While this presents an opportunity to earn foreign revenue, we should ensure that we do not export our gas at the expense of domestic and regional markets.”

BUSINESS REPORT