17 March 2010

Southern Africa: Call for National Oil Companies to Collaborate

Johannesburg — THE Department of Energy has mooted collaboration between national oil companies in southern Africa to ensure security of fuel supply in the region amid withdrawal of oil majors from certain countries.

Decisions by BP and Shell to withdraw from marketing and retail markets in these countries have opened up opportunities for national oil companies to emerge as key players in downstream activity, which includes the selling and distribution of refined petroleum products.

There has been a shift by some oil companies from the low-margin downstream sector to the more lucrative upstream activity, which includes the recovery and production of crude oil.

BP earlier this month announced its intention to sell its marketing businesses in Namibia, Malawi, Tanzania, Zambia and Botswana.

The company, however, decided to hold on to its assets in SA and Mozambique. Shell has divested from several African countries.

In a speech delivered at an oil and gas conference in Cape Town yesterday, the department's director-general Nelisiwe Magubane said the divestment of the companies had serious implications for southern Africa.

The department's spokesman Bheki Khumalo delivered the speech on behalf of Magubane. She said: "Is it not perhaps time for national oil companies such as our very own PetroSA and Sonangol (Angola's national oil company) to collaborate and look at regional approaches to these challenges?

"Is it not the right thing to do in order to ensure the region's security of supply is indeed guaranteed despite the massive blow which is dealt by these withdrawals?

"We, as a region, need to start looking at the regional infrastructure for oil and gas that goes across our borders," Magubane said.

She said it was perhaps prudent to construct regional oil and gas infrastructure pipelines in order to reduce the effect of the movement of big trucks on the roads.

PetroSA has said that its production from its proposed 400 000 barrels-a-day crude oil refinery in Coega will exceed SA's fuel requirements and the excess capacity will be exported to neighbouring countries.

Magubane reiterated that SA would continue to use fossil fuels.

"If you are reading newspapers you will be forgiven for thinking that fossil fuels have no place in our country's needs.

"The reality is the opposite in that we are going to work flat out to ensure that we ramp up the use of renewables in our energy mix."

"However, we will simultaneously continue to use fossil fuels as we search for ways in which we can reduce the impact of greenhouse gas emissions," she said.

Khumalo would not comment further on the department's suggestions over intra-regional collaboration. He said the department was still working on the detail.

"But I must say that we are serious about encouraging co-operation among national oil companies," he said.

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