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Oil rigs such as the Haiyang Shiyou rig 981, a deepwater drilling rig photographed in the South China Sea in 2012, could become a common sight along the South African coast with the announcement that the country was to exploit offshore fossil fuels.
President Jacob Zuma on Wednesday unveiled plans to drill at least 30 deep-water oil and gas exploration wells within the next 10 years as part of a multibillion-rand long-term plan to exploit offshore fossil fuels along the country’s 3 000km coastline.
Speaking in Durban, he said studies suggested that South Africa had potential oil reserves of up to 9 billion barrels of oil and 11 billion barrels of natural gas (equivalent to 40 years of current South African oil consumption and 375 years of current gas consumption).
If viable oil and gas reserves were found, the country could possibly extract up to 370 000 barrels of fossil fuels each day within 20 years – the equivalent of 80 percent of current oil and gas imports.
This would create up to 130 000 new jobs and boost GDP growth by 1 percent a year – but weighed against these benefits was the risk of major oil pollution leaks, fish kills, burning offshore wells and massive expenditure to drill wells and create land-based pipelines to transport oil and gas to local industries, power plants and residential homes.
Unveiling the government’s new “blue economy” plans, Zuma said the country was surrounded by a vast ocean whose economic potential remained largely untapped.
Apart from oil and gas exploration, the new maritime component of Operation Phakisa includes major plans for ship repairs, aquaculture (fish-farming) and the possible massive extension of South Africa’s current exclusive economic zone as far south as Marion Island.
The development of the 2 000-page “oceans economy” section of Operation Phakisa (Sotho for Be Quick) had involved more than 650 people from government, academia, industry and other groups.
Other highlights of the new blue economy plan include: the possible creation of a new national shipping line in partnership with South Korea; developing a new Oceans Act, with a draft Oceans Bill to be published next year; creating new ship-repair facilities at Richards Bay that would create 200 new jobs; creating 4 000 new jobs by increasing the volume of minerals exported by ship from South Africa; 24 new fish-farming projects, including new kob and dusky cob fish farms at Mtunzini and Richards Bay; and a new R500 million Aquaculture Development Fund.
However, the expenditure, economic benefits and environmental risks of the offshore oil and gas industry project is likely to capture most public attention.
Documents posted on the Operation Phakisa website (www.operation phakisa.gov.za) suggest that drilling a single oil/gas well would cost about $150m (R1.66 billion) – a total cost of up to $5bn for 30 wells. This was likely to be a risky investment considering the success rate of finding viable oil/gas reserves in exploratory wells was around 15 percent.
If viable wells were discovered, it would still take decades to develop a new oil and gas industry, considering that there was a 15 to 20 year time lag in Nigeria from the moment of licensing until first production.
Zuma also hinted strongly that – to provide comfort for foreign oil and gas investors – the licensing, regulation and approval process would be strictly controlled by the Department of Mineral Resources rather than the Environment Department.
Morne du Plessis, the head of the South Africa’s branch of the Worldwide Fund for Nature (WWF), that participated in the development of the new oceans economy plan, said that while WWF had several concerns, it had chosen to influence the process from the inside rather than be excluded.
“We don’t believe economic development and environmental conservation have to be polar opposites. But we cannot endorse wholesale oil and gas development and we believe that South Africa could ensure greater energy and climate security benefits by exploiting wind and sun energy.”
Other environmental groups voiced alarm. Earthlife Africa and the South Durban Community Environmental Alliance said: “Operation Phakisa has very little to do with poverty alleviation and everything to do with profits for corporates, most likely with the familiar kickbacks for well-connected tenderpreneurs and their political allies.”
Earthlife Africa spokeswoman Alice Thompson also voiced concern over the speed of the public participation process for oil and gas exploration and the failure to address the concerns of communities, labour and environmental groups.
The plan was also likely to sabotage South Africa’s voluntary commitment to reduce its greenhouse gas emissions by 34 percent by 2020.
South Africa’s per capita emissions were already 43 percent higher than the global average and drilling for every last drop of oil and gas was likely to speed up the process of runaway climate change.