South Africa’s upstream oil and gas industry has the potential to be a driver of economic growth. According to a new report published by EnerGeo Alliance entitled Economic Benefits and Opportunities of Strengthening South Africa’s Upstream Oil and Gas Sector, the country is experiencing a prolonged period of economic stagnation characterized by slowing GDP growth, declining investment and low unemployment. However, the country also holds some of Africa’s most promising oil and gas deposits, and these resources offer significant economic benefits and opportunities.
South Africa is more than just a remote oil and gas market. This is an oil ministry that has proven to have great upside potential. Offshore, the country offers proven petroleum systems in the Oryx and Sable fields, as well as greenfield discoveries such as Ibubesi and the Bururupada and Ruiperdo discoveries (made in Block 11B/12B in 2019 and 2020). Bururupada and Ruiperud have an estimated oil equivalent capacity of 275 million barrels and 340 million barrels, respectively, with 70% gas. On land, the country has up to 370 trillion cubic feet of technically recoverable shale gas in the Karoo Basin. At the same time, the country’s vast maritime exclusive economic zone is largely undeveloped, providing strategic opportunities for exploration and production companies.
This potential is further amplified by the exploration successes seen across the border in Namibia, where first oil is expected to be developed by 2029 through the Orange Basin project. South Africa, which accounts for 70% of this basin, has the opportunity to make similar as well as transformative discoveries. South Africa also has the advantage of well-established infrastructure. The country has six oil terminals, including the 55 million barrel Saldanha Bay facility, a 3,000 km network of high-pressure oil and gas pipelines, and the soon-to-be rebuilt Mossel Bay gas-to-liquids plant and SAPREF refinery. These serve as the basis for new upstream developments.
This report shows that the economic benefits of developing South Africa’s upstream regions are limitless. Throughout the lifecycle of the project, the country will benefit from enhanced fiscal revenues. Direct and indirect job creation. Local procurement and corporate development. Strengthening infrastructure development and energy planning. South Africa also suffers from high demand and low supply, underpinned by an overreliance on coal and imports. The country’s upstream oil and gas sector can address this problem by providing domestic sources of fuel and electricity.
The development of Block 11B/12B alone will provide a much-needed boost to the country’s economy. The project could increase South Africa’s annual GDP by R23 billion and could contribute an additional R8.6 billion in annual tax revenue. The project also has the potential to create more than 20,000 direct, indirect and induced jobs, potentially contributing more than R25 billion annually to the country’s balance of payments, while reducing import dependence. Future upstream projects will significantly enhance these benefits, positioning oil and gas as a vehicle for economic resilience, while fostering broader industrial linkages and stimulating growth in manufacturing, heavy construction, and transportation.
Despite this potential, South Africa’s upstream market is characterized by low levels of exploration activity. Environmental opposition to offshore drilling further impacts development, while bureaucracy discourages investors. More than $1 billion worth of projects are currently on hold due to litigation. Nikki Martin, president and CEO of the EnerGeo Alliance, said the report “underscores the critical importance of streamlining regulations and legislation to help countries realize their full energy potential. Such reforms are fundamental to fostering economic development, improving quality of life, and expanding equitable access to reliable energy resources.”
Efforts are already underway to address long-standing challenges. The country is preparing to lift a moratorium on shale gas development, paving the way for research, exploration and future production. The move follows the Upstream Petroleum Resources Development Act, which comes into effect in 2024 and provides greater clarity for the industry. In 2025, the South African National Oil Company was established and the country also announced an updated Integrated Resource Plan (2025) with clear targets for natural gas production. These measures are complemented by a strong push by international companies to unlock South Africa’s oil and gas potential.
Ross Compton, EnerGeo Alliance’s senior director of global policy, said: “As the voice of geoscience companies, innovators and energy developers who use science to power the world, we are committed to working with governments and communities to build a secure, reliable energy with reduced emissions for South Africa’s future.”
