Date: 16/03/2010
Source: The Department of Energy
Title: SA: Khumalo: Opening address by the spokesperson, on behalf of the Director General Ms Nelisiwe Magubane, at Oil and Gas Africa 2010, Cape Town

Chairperson, Steve Hrabar

Conference Organisers

Distinguished Guests

Ladies and Gentlemen,

Last week my department received and honoured an invitation to address a major gathering by the African Refiners Association here in Cape Town. Today, we are, again, honoured to receive and honour an invitation to address this important international oil and gas conference.

It is also significant that it is once again happening in this party of the world. Cape Town has become an important destination for gatherings of this nature. Almost all the film stars including the celebrated Samuel Earl Jackson and our very own Oscar winning actress Charlize Theron, musicians such as George Benson and Jeffrey Osborne, soccer personalities including the President of FIFA Sep Blatter and David Beckham, politicians from all walks of life, business people as well as tourists flock to this city owing to its reputation and scenic beauty typified by Robben Island, Table Mountain, Cape Point which not only symbolically but also literally serves as an area where there is confluence between the Atlantic and the Indian Ocean.

Author and activist Moeletsi Mbeki in his book the Architects of Poverty makes important and profound observations and compares the impact of slavery which was perpetrated by Africans who were armed with guns so that they could capture people in the interior and sold them to the owners of ships that transported them to the Americas to be sold into slavery and the hundreds of oil rigs that are "rendered visible at night by the flames of the natural gas they flare" which also pump crude oil from the bowels of the earth to waiting oil tankers - which he calls those ships again! - which carry the oil straight from the rigs to great oil refining industries in the United States, Asia and Europe. He goes on to make the point that this is another commodity - other than the slaves - that the continent of Africa is selling to the rest of the world.

In the past it was people; today is its natural resources. It is important that this conference is one way of trying to reverse some of these anomalies. It is gatherings and, in fact these premier events, that provide the platform for all of us who are involved in the oil and gas industry to come together and reverse the trend we have described a few minutes ago and create societies that stand to benefit from this important industry. African countries in general and those of the south in particular have an obligation to ensure that they use the prevalence of these natural resources to develop themselves and their own citizens and catapult them from the conditions of poverty and under-development in which they find themselves. Some of our countries need to move away from the conditions of what effectively is a system of mercantile capitalism to a stage of industrialization and effectively catch up with post industrialized societies. I am glad that this conference is being held in our country which belongs to the gamut of countries that - despite apartheid - managed to extricate itself from the conditions that we spoke about earlier. However, as a country we continue to suffer from huge inequalities, major unemployment and grinding poverty.

Cape Town therefore has become a major hub in the supply chain of the oil and gas industry and this is being extended through these conferences and other initiatives to include marine and the shipping industry including other support services that are associated with this industry.

As you are aware in our country we have opted for a dispensation that recognizes that unless we do something fundamental to improve the conditions of life of formerly disadvantaged groups we run the risk of a major catastrophe. It is with this in mind that the government post 1994 decided to embark on a model where international and domestic companies would be encouraged to embrace the BEE model through which they will be encouraged to partner with groups from previously disadvantaged communities.

This has been formalized by the DTI codes of good practice which does not only refer equity participation by these previously disadvantaged groups but also includes preferential procurement management control and other key aspects that are crucial in our quest to correct the power imbalance of the past.

There is liquid fuels charter which was agreed to by all the stakeholders who are organised in this industry and the Minister will soon announce steps that we intend to take as we review the progress that has been made since the charter was adopted a few years ago. In fact the charter did set important targets and milestones to be met in order successfully to transform the oil industry in our country.

Going back to the metaphor of ships in this industry, we would like to encourage you as delegates at this conference to investigate the possibility to start - if you have not - the development of the supplier or vendor manufacturing, maintenance and distribution infrastructure and create employment opportunities in the process.

In our country the government, through Eskom, is going to be spending above R800 billion in the Build Programme. This was a decision that we took during the time of economic boom, however, it has helped us a major countercyclical measure. The Minister of finance has revealed that we experiences positive growth of more than 3% in the last quarter. We need to see the same level of infrastructure investment by this industry even when there are early signs that the worst of the recession might very well be behind us.

This is particularly the case at the moment when major oil companies have announced plans to divest from downstream assets in some parts of our region. This has serious consequences for our neck of the woods as they sometimes say. Is it not perhaps time for national oil companies such as our very own PetroSA and Sonangol to collaborate and look at regional approaches to these challenges? Is this not the right thing to do in order to ensure that the region's security of supply is indeed guaranteed despite the massive blow which is dealt by these withdrawals.

We, as a region, need to start looking at the regional infrastructure for oil and gas that goes across our borders. Is it perhaps not prudent that we construct regional oil and gas infrastructure pipelines in order to reduce the impact of the movement of major trucks on our regional roads? Is this not a way of ensuring that transnet and its counterparts in sub-saharan Africa collaborate to develop an infrastructure that was envisaged when NEPAD was conceived?

Transnet is already developing infrastructure for LP gas importation and storage in Saldanah Bay. This is an event of major strategic and economic significance of the country. This conference is a major development for us as it provides a forum where we can strength regional collaboration, and alliances as well as exchange information and technical know-how in this industry. The possibility of achieving these was clearly demonstrated last week during the state visit of our President to the UK where UK companies were keen to develop these partnerships. We have to work with players in our region so that partnerships with the developed north can result in real and meaningful economic participation and benefits for our peoples.

Finally, there is a lot of emphasis on the importance of renewables in the country and the worlds energy mix. In fact, if you are reading newspapers you will be forgiven for thinking that fossil fuels have no place in our country's needs. The reality is the opposite in that we are going to work flat out to ensure that we ramp up the use of renewables in our energy mix, however we will simultaneously continue to use fossil fuels as we search for ways in which we can reduce the impact of greenhouse gas emissions.

We will do so as we strenuosly ensure that we remain true to the country's commitment as expressed through the Long Term Mitigation scenarios.

In conclusion as leaders we must be inspired by the determination to respond to the need to keep our ear close to the ground by remembering what Winston Churchil said that the "public would find it hard to look up to the leaders detected in that position".

Any failure to take action, and act now will have serious consequences which will negatively affect even future generations.

I officially declare the conference open and wish you well in your deliberations.

I thank you.