Ambitious SA oil plan unveiled

PRESIDENT Jacob Zuma outlined ambitious plans yesterday for oil and gas exploration in coastal waters that he said could contain as much as nine billion barrels of crude and vast quantities of natural gas.

In a speech to senior South African and Malaysian officials in Durban, Zuma said the government wanted 30 exploration wells drilled in the next 10 years.

"Over the next 20 years, this could lead to the production of 300000 barrels of oil and gas a day," Zuma said.

The industry needed a legislative framework that would benefit both South Africa and participating firms, he said.

But Zuma stressed there was uncertainty about the extent of hydrocarbon resources in South Africa's waters, some of the last unexplored stretches of the continent's energy-rich coastline.

Jacques Roux, a consultant geologist at the state Petroleum Agency, said the estimates were speculative resources, meaning they were untested and mainly in deeper waters and were derived from analysis of rock structures and seismic anomalies.

French multinational Total started South Africa's first deep- water drilling in July, in the Outeniqua Basin, 175km south of Mossel Bay.

Despite the interest, oil firms have been cautious about piling in because of uncertainty about South Africa's petroleum laws.

Parliament passed an amended petroleum bill in March that gives the state an automatic 20% stake in new gas and oil exploration ventures, a proviso oil firms said at the time would have a "chilling effect" on investment. – Reuters