Programme director
Honourable Ministers
Heads of oil companies
Honourable guests
Ladies and gentlemen
I feel honoured for having been asked to welcome you to this important conference. To our visitors, I wish to extend a hearty welcome to our country and wish you all a pleasant stay. This conference takes place barely two weeks after the conclusion of Africa’s first Confederations Cup, where once again we demonstrated to the world what Africa working together in partnership with others can do. Some of you will also remember that it is at this very venue that the World Economic Forum with a focus on Africa was held a few weeks ago.
We indeed are all in the midst of an unprecedented global economic crisis; one which unfortunately seems to be proving extremely resilient. We therefore cannot afford to come to a conference like this one and not achieve concrete outcomes. The level of attendance attests to the importance that all of the role players attach to energy as an enabler of a better life for our respective populace. I am pleased at the number of potential investors as this demonstrates that their investment appetite in the continent has not reduced as a result of global economic challenges. The agenda for the conference is vast and for each topic there ought to be an outcome that we can report to the people of this continent of ours as well as to our potential partners. We need to applaud the organisers for bringing together some of the best minds in the energy sector at this time to deliberate on key issues affecting the sector.
The importance of energy to the South African economy has lead to the establishment by our President of a focussed energy ministry headed by myself. As you may be aware we have embarked on one of the most extensive energy infrastructure investment programmes worldwide. This will involve huge levels of investment and a focus on the creation of the necessary government policy platforms is necessary.
On crude oil, Africa indeed has now become an important source of crude oil for many developed and the major developing economies. We however have to constantly ask ourselves as to whether we derive sustainable development from the exploitation of this resource. What, other than monetary proceeds, do we benefit from this resource? Are we seeing investment in local refining capacity and liquid fuels infrastructure for meeting demand? Is the investment accompanied by local manufacturing, which sustains employment? Why are a number of international oil companies downscaling their activities in the continent other than in upstream activity? These are questions for which I hope some concrete answers will emerge from the interactions during this conference. It is also true that some of the investments in upstream activities have been negatively affected by the global economic downturn and as such the continent may be disadvantaged by these developments.
In our country we have started concrete programmes which are aimed at ensuring that we continue to have security of fuel supply. The South African National Oil Company, PetroSA, is about to conclude a feasibility study into a crude oil refinery, whose output could serve the region’s future petroleum products needs. We are exploring the possibility of making this facility a regional facility by attracting investments from the neighbouring countries in return amongst others for greater security of fuel supply. Sasol is also investigating a new coal to liquid plant and we await the conclusion of the feasibility studies, which will inform the future of that facility.
The integration of business imperatives, technology, skills development, environmental processes and energy governance is a complex undertaking and one for which imaginative solutions are required. I trust that one of the issues to be discussed is how to improve the capacity in energy departments of our various countries in the continent. We need to reduce reliance of overseas consultants at the expense of building national capacity.
On gas, the absence of infrastructure on the one hand and local developed markets on the other seem to be a repeat of the so called “chicken and egg” situation. I believe that natural gas and indeed LPG is grossly underutilised in this continent. We need to find imaginative ways of increasing the use of this energy resource. On LPG the cost seems to be a deterrent and therefore government intervention to reduce the cost is inevitable.
Ladies and gentleman
One of the most daunting challenges facing us is climate change and how we as a continent respond. I am pleased that the agenda includes discussion on renewable energy, carbon capture and storage and the Clean Development Mechanism. Climate change can be an opportunity for the continent particularly if we set up structures to benefit from for example the Clean Development Mechanism (CDM) as well as manufacturing capability for renewable energy technologies. I believe that Africa has not taken full advantage of the CDM and perhaps setting up of regional CDM structures may be a way forward.
For South Africa we have identified energy efficiency and conservation as a low risk and low cost option to respond to climate change imperatives and also as a way of also postponing some of the investment in infrastructure, the funding for which in this economic climate may be challenging. For the sake of the planet and as inheritance for future generations we need to learn to do more with less in as far as energy use is concerned.
On renewable energy, we have set ourselves a target of 1 million solar water geysers in the next five years. This target necessitates local manufacturing and assembling of components and as such will also create new economic activity with the accompanying decent jobs. We will also be attracting investment for independent power producers using wind for electricity generation.
On the issue of limiting emissions, South Africa is currently investigating carbon capture and storage as a greenhouse gas emission mitigation measure to complement other measures such as energy efficiency and the use of renewable energy. A centre for carbon capture and storage was established in March of this year and an initiative to develop a carbon dioxide storage atlas, which is aimed at identifying potential sites for future storage of CO2, has commenced. Although the atlas currently focuses on South Africa it can be expanded to include the Southern African Development Community (SADC) region.
Coming back to the Clean Development Mechanism (CDM) that I referred to earlier, Africa has only registered 30 projects with the CDM executive board and that has got to be increased. An increase of such projects has the potential of not only reducing Greenhouse Gas emissions but also to generate income. I would like to propose that we consider the formation of a regional structure to coordinate the work of Designated National Authorities (DNAs). We have been assisting in the formation of DNAs in other countries in the continent. I am giving these details to demonstrate that there is capacity already in the continent that we can build on as we tackle climate change.
In conclusion let me once again welcome you to South Africa and wish you fruitful discussions during this Africa Energy Week forum. To my counterparts and their representatives, we dare not forget that as we pursue the energy sector discussions, there is a greater responsibility that we carry and that is the commitment we made to the people of the continent towards meeting our Millennium Development Goals. As we deliberate, we ought to have that as our guiding objective. We ought to ask “will this position/strategy/investment decision contribute towards the achievement of the MDGs?” for that is what our peoples expect of us.
I thank you.
Issued by: Ministry of Energy
6 July 2009
