Mineral and petroleum resources minister Gwede Mantashe has warned that the geopolitical tension in the Middle East will have an unavoidable effect on fuel supply and fuel prices.
He was speaking at the Southern Africa Oil and Gas Conference in Cape Town on Monday. He warned that the world was in a time of heightened geopolitical tension that continued to create uncertainty and volatility in global oil markets.
“Since the onset of the conflict in the Middle East, fuel supply chains have experienced disruptions, while the under-recovery on fuel prices has continued to fluctuate. While questions remain about potential fuel supply disruptions, the reality is that substantial fuel price increases are increasingly unavoidable.”
The onset of conflict between the US and Iran weeks ago saw the Brent crude oil price breach the $100 mark. Mantashe said countries that rely heavily on imports of refined petroleum products are particularly vulnerable to global market shocks.
“To maintain product availability in our country, as communicated last week, the department remains in constant engagement with industry players to explore all possible supply sources. These engagements are aimed at ensuring uninterrupted fuel availability in the domestic market, without immediately utilising the country’s strategic reserves.”
He said that as the geopolitical tension introduced more pressure and uncertainty to the global trade and supply chain system, the sustainable long-term solution to South Africa’s challenges lies in domestic production.
“This can only be achieved through the rigorous exploration and responsible exploitation of our own petroleum resources. As you are aware, one of the biggest challenges facing the development of our petroleum sector remains the persistent opposition from environmental lobby groups who continue to block every oil and gas development initiative in our country.”
He said South Africa is endowed with significant offshore petroleum potential, including major gas discoveries in the Outeniqua Basin, and the Orange Basin has emerged as a world-class frontier after oil discoveries in Namibia.
“Regrettably, we have not yet been able to fully explore and exploit this potential due to blockages against oil and gas development in the name of environmental protection,” he said.
He said the constitution states that South Africa must secure ecologically sustainable development and the use of natural resources while promoting justifiable economic and social development.
“The truth is that rising oil and gas prices have a direct ripple effect on the cost of living. The lack of access to these resources has an even greater impact, as it can lead to energy poverty, rising unemployment and the further entrenchment of poverty and inequality.”
He said the Upstream Petroleum Resources Development Act represents a critical intervention in this regard, as it separates petroleum from mining legislation and establishes an enabling regulatory framework to accelerate exploration and production of the nation’s petroleum resources.
“We are also advancing the modernisation of the Petroleum Products Act. Following public consultations on the draft Petroleum Products Bill, it is undergoing certification processes ahead of submission to the cabinet for approval, and thereafter to parliament.”
He said the recently established South African National Petroleum Company (SANPC) will serve as the country’s “champion” in the petroleum sector and will facilitate state participation in the development of South Africa’s petroleum resources.
TimesLIVE
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