Rovuma Basin: Shale-gas debate diverts attention from big oil-and-gas rush off South African coast

The ongoing shale-gas debate around fracing in the Karoo is distracting attention from the "oil-and-gas" rush off the South African coast. There is a massive rush off the South African coast that has the potential to radically alter the energy landscape of South Africa, and no one is talking about it.

Left, Lizel Oberholzer, director, Bowman Gilfillan South Africa. Right, Stella Ndikimi, partner, Bowman Gilfillan Tanzania

Within months of the discovery of huge gas reserves off the Mozambican coast in early 2012, international oil companies rushed in to explore oil and gas opportunities off the entire coast of South Africa: east, south and west. They include names such as Anadarko, Total, Sasol and ExxonMobil. Approximately 99% of all drillable areas off the coast have been awarded or are under application.

Silver Wave Energy Pte. Ltd., Singapore, was the first to make applications to the Petroleum Agency of South Africa for technical cooperation permits over most of the available area off the east coast. A technical cooperation permit is merely a desktop study of the available data over the area, and does not include any physical activity over the block.

There is a concern that a large part of the explorable area could be granted to just one company, which could have serious implications around competition and fair access for previously disadvantaged persons.

This is because the Mineral and Petroleum Resources Development Act (MPRDA) does not limit the area over which oil companies may apply for petroleum rights and permits, and stipulates that these applications must be processed on a first-come-first-served basis.

With hindsight, it would have been preferable if the government had announced a bidding round for these offshore blocks, limited the number allocated to each bidder and looked at each applicant's financial and technical ability to drill for oil and gas.

Instead of being excited about these recent offshore oil-and-gas developments and the benefits they may bring, we are being sidetracked by the shale-gas issue.