Oil and Gas sector in South Africa

24th September 2012

The South African energy sector is the largest in Africa, with the oil and gas sector boasting the 2nd largest refinery capacity in Africa.

Infrastructure plays a central role in the South African Government’s development agenda with a four year capital expenditure programme of £90 billion.

Market overview

South Africa is the economic powerhouse of Africa, contributing more than 40% of all industrial output and accounting for 50% of the continent’s spending power.

Upstream Activity

South Africa has modest reserves of oil and gas (about 15 million barrels of proven crude reserves) but offshore and onshore exploration is currently underway. Significant oil and/or gas reserves are believed to exist off the West Coast of South Africa. The gas industry in South Africa in particular is growing rapidly due to a range of promising discoveries. These include deposits in neighbouring countries, as well as offshore in South Africa, while onshore the Karoo region is believed to host massive reserves of shale gas. Deposits in the Karoo are estimated to be in the region of 485 tcf, making it one of the largest in the world.

Downstream activity

South Africa’s oil and gas industry is primarily downstream in nature and the country has the second largest crude oil refining capacity in Africa (703 000 bbl/d of total oil), surpassed only by Egypt.

Synfuels

South Africa has a highly developed synthetic fuels industry, in which Sasol is the major player. Sasol produces up to 30% of South Africa’s transport fuel requirements through its coal-to-liquids process based on the Fischer Tropsch technology.

Access to West & East African Market

South Africa, in particular the Western Cape region, is currently positioning itself as a service and supply hub to the industry throughout Africa, particularly West Africa. At present, several services such as rig and ship repair, education and training, boat building, fabrication and logistics are already taking place in the Western Cape. The provincial and national government is keen to expand on this. A number of oil and gas companies are also using South Africa as a base for their operations throughout the continent including newly discovered reserves off the East Coast of Africa.

Key opportunities

There are numerous opportunities related to maintenance (including schedule shutdowns)
Specialised Engineering or Consultancy Services
Education, Training and Skills
Supply of Hi-Tech or Specialised Equipment
Western Cape Services Hub
Petro SA is planning to build a massive new refinery in the Eastern Cape, which would significantly increase refining capacity. The £5.5 billion Mthombo refinery has been designed with a capacity of 360,000 bpd

Latest export opportunities in the Oil and Gas sector

Latest export opportunities in South Africa

Getting into the market

Much of South Africa’s legal, economic and business practices and legislation is based on the UK equivalents. This makes operating in South Africa less problematic and alien than in other international markets. Regulatory standards also tend to mirror EU equivalents and the cultural and historical links are broadly positive in the UK’s favour. In return, the UK receives 4 out of every 5 South African investment projects in Europe.

South Africa does operate a policy of Broad Based Black Economic Empowerment to redress the imbalances to black employment under the apartheid regime.

More about doing business in South Africa

Contacts

Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).

To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.

Jonathan Giliam

Trade & Investment Adviser

UKTI Johannesburg

+27 (0)11 537 7225

E: jonathan.giliam@fco.gov.uk

Mandisa Ramotsho

Trade & Investment Officer

UKTI Johannesburg

+27 (0)11 537 7226

E: mandisa.ramotsho@fco.gov.uk

Contact your local international trade team

UKTI Events

UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.

Latest events in the Oil and Gas sector