South Africa's energy industry
South Africa's energy sector is critical to the economy, contributing about 15% to the country's gross domestic product (GDP).Thanks to its large coal deposits, South Africa is able to offer cheap electrical power by international standards - the country is one of the cheapest suppliers in the world.
South Africa has no significant oil reserves, and relies on coal for most of its oil production. The country has a highly developed synthetic fuels industry, as well as small deposits of oil and natural gas.
Coal
Coal accounts for about 75% of primary energy consumption in South Africa. The majority of this is used to generate electricity, while a significant amount is channelled to synthetic fuel and petrochemical operations.
Iscor's steel plants are the main consumers of domestic coking coal, together with the synthetic fuel and petrochemical operators. The gold mining, cement and brick and tile industries are also large users of electricity, generated by steam coal.
Nearly a third of production is exported via the Richards Bay coal terminal, the world's largest coal export facility. Europe is the primary destination.
Sasol and PetroSA are the two major players in the synthetic fuels market. Sasol is the world's largest manufacturer of oil from coal, gasifying the coal and then converting it into a range of liquid fuels and petrochemical feed stocks. Sasol has coal liquification plants at Secunda (oil) and Sasolburg (petrochemicals).
Since 2000, the company has been investigating the feasibility of replacing coal with natural gas, based on the high impending capital investment expenditures in coal mining operations and the high cost of compliance with environmental regulations associated with coal.
In terms of agreements between South Africa and Mozambique, Sasol is required to deliver natural gas from Pande and Temane gas fields in Mozambique, by pipeline, to Secunda in 2004. Construction has commenced. The two governments have an option to jointly invest in up to 50% of the gas pipeline.
Oil and gas
In a rationalisation of the state's commercial interests in the oil and gas sector, Mossgas and Soekor were merged into state oil and gas company PetroSA in 2001.
PetroSA converts natural gas into a variety of liquid fuels like petrol, distillates, kerosene and petroleum gas. In 2001, PetroSA completed a project to bring the EM gas fields off shore of Mossel Bay on stream, giving its Mossel Bay plant an additional eight years of gas life.
Parallel exploration is being carried out in other sections of the Bredasdorp basin off Mossel Bay, with the aim of assessing the full extent of these available reserves, and determining PetroSA's economic potential.
PetroSA operates the Oribi/Oryx oil field, producing 25 000 barrels of oil a day, and brought the Sable oil field - 150 kilometres southwest of Mossel Bay - on stream in 2003.
South Africa's prospects for natural gas production were also boosted in 2000 with the discovery of offshore reserves close to the Namibian border. The reserve, named the Ibhubezi Prospect, contains proven reserves of 0.27 to 0.3 trillion cubic feet of hydrocarbons.
US-based companies Forest Oil Corporation and Anschutz, along with local empowerment firm Mvelaphanda, are exploring the Ibhubezi field. PetroSA bought a 30% share in the Ibhubezi project in 2003, with an eye to using Ibhubezi gas, along with gas from Namibia and Mozambique, at its Mossel Bay plant.
Exploratory drilling was completed in late 2004, with the consortium hoping to begin production in 2006.
South Africa has a well-developed refining and downstream oil sector and is one of the major refining nations in Africa. The country's crude oil refining capacity is 466 547 bbl/d. Products are sold in local markets and exported, mainly to East Africa.
Multinational companies in South Africa include Shell, BP, Caltex and Total Elf Fina. A number of these companies have struck deals to bring black empowerment companies in as minority shareholders.
PetroSA manages South Africa's strategic stocks of crude oil, includes the Saldanha Bay oil storage facilities, one of the largest in the world. South Africa imports crude oil primarily from the Middle East, and is trying to reduce its dependency on Iran by increasing imports from Kuwait, UAE, Saudi Arabia and Nigeria.
Electricity
Eskom, a parastatal, generates 95% of the country's electricity, as well as two-thirds of the electricity for the African continent, and owns and operates the national transmission system.
Eskom's network is made up of more than
300 000km of power lines, 27 000km of which constitute the national transmission grid. The main generating stations are located in Mpumalanga, where there are vast coal reserves.
Electricity is primarily coal-fired (92% of SA's electricity is produced from coal); there is one nuclear power station (Koeberg), two gas turbine generators, two conventional hydroelectric plants and two pumped storage stations.
Eskom exports power to Botswana, Lesotho, Mozambique, Namibia, Swaziland and Zimbabwe. Eskom's campaign to improve the availability of its existing hydro-power plants, coupled with the possible advent of gas and further hydro-power generation, has deferred the need for new coal generating plants.
New generation sources will not be required before 2007, and possibly only in 2010. A limited number of large industries generate their own electricity. The first private player in the industry is the US' AES Corporation, which bought 50% of Johannesburg's Kelvin power station in 2001.
Nuclear energy
Nuclear energy does not play a major role in South Africa - accounting for about 3% of all energy - but is being investigated as a
future potential energy source and alternative to coal.
South Africa serves on the board of governors of the International Atomic Energy Agency, as it is the most advanced African country in the field of nuclear technology.
SouthAfrica.info reporter
