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SIMON BROWN: I’m chatting now with her now Niall Kramer, he’s national spokesperson for the Offshore Petroleum Association of South Africa (Opasa). Niall, I appreciate the early morning. You put out a note yesterday talking around regulatory uncertainty in this space. You say that the uncertainty is significantly more harmful than just a flat-out rejection from regulators. It really is a case of making up their mind one way or the other. Otherwise, investors are just unable to do anything. It’s regulatory limbo. It’s the worst space to be.
NIALL KRAMER: Well, yes. Good morning, Simon. Thank you for having me. Yes, that is true. That is how we see it. The key issue here is that all businesses want certainty, whether that’s a yes or a no. But maybe kicking for touch and unclear movement into the future is not helpful to anyone. This industry has been waiting for many years now, doing a lot of modelling and looking at what potentially could be out there.
The net effect of that in the last few years has been to push oil and gas explorers over the border into Namibian waters, especially. That is an area called the Orange Basin and that is where the big discoveries were. The Orange Basin covers both South African and Namibian waters. It’s deep, largely deep offshore, and it is certainly not going to obey political borders.
So the discoveries that are on the Namibian side are indicative that we probably do have a lot of untapped wealth on our side of the border, and our view is sooner rather than later is when we want to get the exploration going.
SIMON BROWN: That’s the key point, is to get that exploration going so that we know as a country what’s there. To your point, geology doesn’t obey political borders. Let’s find out what’s there and then we can start making a plan. This isn’t around necessarily throwing environmental standards out the window. It’s about saying let’s first just get a map of what’s there and then we can plan a way forward.
NIALL KRAMER: Absolutely. There’s no suggestion of behaving irresponsibly. We certainly value environmental conservation. Like any industry, including renewables, nuclear, thermal, there are risks. The way we work is to map out what those risks could be, then rank them for impact and then indicate what the mitigation measures would be and there are plenty of mitigation measures. But the biggest danger and the biggest risk here is doing nothing, which effectively keeps us in the holding pattern that we’re in at the moment as a country.
We’re struggling at 1% economic growth. The world is growing north of 3%, sometimes up to 5%. There is massive investment potential here of probably something in the region of $20 million to $150 million per exploration.
SIMON BROWN: Wow.
NIALL KRAMER: Now, that’s other people’s money and the key is the word exploration. We explore for data and data is what you make good decisions on, not on ideology or a thought or some hunch. Here we have something that could have a very significant impact on GDP. There clearly is a case here, we’ve got something like 80% of our oil consumption is imported and 100% of our gas is imported.
Now, if we do have that in South Africa, so much the better. That’s really what we’re looking for. The big objective would be energy security and the kind of revenue that would flow from that. There are many examples around the world. Clearly the best one is Norway. But there are many, many on how well this has been done.
SIMON BROWN: Yeah, in Norway and their significant sovereign wealth fund as a result of their energy discoveries in the ocean. The key point as well is that while we sit here, frankly, doing nothing, is that things are happening in other countries around the world, and we’re being left behind. We’re losing out on potential investments and jobs and GDP and energy security. The world has moved on. Namibia, I’ve chatted around that, lots is happening in that space and we’re going nowhere.
NIALL KRAMER: Absolutely. You started that talking about the Norwegian sovereign fund, and that’s just on $2 trillion now, and that was entirely a bonsella. If you went back to Norway in the ‘60s, it was a fishing and forestry economy coming out of World War II, it was a poor country. Now it’s one of the richest countries on the planet, with a highly skilled workforce, with a well-managed economy and they’ve taken the upside of their oil and gas resource and put it into a sovereign fund that provides clinics, schools, security, cycle paths, all the things that contribute to a good life. The reality is that there is absolutely no economy anywhere in the world, ever, that has developed to a highly productive country without good, reliable, abundant energy.
SIMON BROWN: Yeah, we’re essentially sending money out of the economy, which if we had it internally, we would keep that money internal to the economy and the significance on that is huge. We will leave it there. Niall Kramer, he’s national spokesperson for the Offshore Petroleum Association of South Africa. Appreciate the early morning.
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