The government's planned oil refinery in the Eastern Cape, Project Mthombo, is certainly not on hold, in fact discussions within the Department of Energy have intensified, Strategic Fuel Fund Association (SFF) CEO Bheki Gila said on 26 February. The refinery was one of a number of factors being considered to expand SA's energy capacity and security, he told the Africa Oil and Gas Legal Summit in Sandton.
Project Mthombo, a 400 000 barrels a day refinery to be built at Coega, has been under discussion for years and was originally scheduled for commissioning by last year. A price tag of $9bn was mentioned four years ago.
Special advisor to the energy minister, the SFF and the Central Energy Fund, SFF compliance officer Maria Kalabakis said there were huge opportunities for SA in its shale gas possibilities, which were estimated to be the eighth-largest in the world. But the country would need a robust regulatory framework to balance the opportunities with the risks. Draft regulations had been drawn up in line with international standards but had not yet been promulgated.
He continued that the regulation of shale gas in most countries was a combination of "command and control" and permitting. Command and control on its own was highly prescriptive, but requiring operators to secure permits for different activities was costly, allowed inside discretion and lacked transparency. Rather, the activities that should be regulated included the selection of sites, particularly ensuring they were not close to schools or water sources, the spacing between wells, how wells were lined with concrete to prevent leakage of fracking fluids, and the composition of the fluids to limit the use of toxic chemicals. There also needed to be standards on sourcing, storing or disposing of waste water.