Listen here.Namibia struck oil and became the hottest investment story on the continent. Mozambique's tax take is about to jump sharply on the back of gas. Right next door, South Africa is sitting on a geological basin that industry figures compare to the discovery of gold in Johannesburg, and it has just taken another direct hit in the Constitutional Court. OPASA's Niall Kramer joins Alec Hogg to explain what is really being left in the ground, who is standing in the way, and why the window on this opportunity will not stay open forever..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox every morning on weekdays. Register here.Support South Africa's bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Edited transcript of the interview.Alec Hogg (00:11)At the BizNews Conference two weeks ago, Johnny Copelyn, chief executive of HCI, a company that owns a business called Impact Oil and Gas, told us there was a big Constitutional Court hearing, one that had taken many years to get to, coming out on the Friday. Well, that ConCourt hearing did come out on the Friday, and it didn't end the way that he hoped it would. We're talking today to get some context on this.I'm joined by Niall Kramer. He is the executive director of OPASA. Now, OPASA, you'll tell me in a moment exactly what that stands for, but they represent companies like Sasol, PetroSA, TotalEnergies, Africa Energy Corporation, and the two protagonists in that big court action, Shell and Impact Oil and Gas. Good to be talking with you to get some context on that court decision, because it's kind of the end of the road now. It's the Constitutional Court, and they say no, you cannot go ahead with drilling, or even trying to find out if there is oil, off the Wild Coast. But before we get there, OPASA, what exactly does it stand for?Niall Kramer (01:25)Good morning, Alec. OPASA is the Offshore Petroleum Association of South Africa. As you say, it represents the ten companies that are looking to drill offshore, for whom I am the spokesperson. Offshore drilling typically takes place a hundred, maybe a hundred and fifty kilometres offshore in the deep ocean. There are some closer, onshore plays as well.In our reckoning, the size of the prize that is out there is down to the geology, and regardless of what courts or anyone else might say, and however those views change over time, the geology is not going to change. So the size of the prize that is out there is potentially very, very significant, and we need to know what that is so we can make good decisions.You referenced the court judgments, and there were in fact two judgments over two days, one on the West Coast, one on the East Coast, and they went in very different directions. But both of them were essentially about process. The one on the West Coast was about the degree of frivolous litigation that could take place from activists on a serial basis, again and again. And then the one on the East Coast, which you've just referenced, was the ConCourt one, and that found against the applicants on the basis of the amount of consultation. So for me, the key takeaway here is that the judgments we have are about process, not about whether we need energy, or what form that energy should take. If the processes are followed, then there's no reason not to continue. Let me give you a practical example: Block 11B/12B, the area off Mossel Bay, which has already been discovered, has already had the impact assessment and public participation done — they've just announced, yesterday, that they'll be restarting a new one on that.Alec Hogg (04:07)This is very important. At BizNews we've been following this closely, ever since James Lorimer, the DA's spokesman on mining, made this a particular area of focus. In fact, if you go and look at the parliamentary records, you'll find that he has one share in his portfolio, and that one share is Kinetiko, which is doing oil and gas exploration in Mpumalanga. Perhaps that's not really in your remit, but maybe you could share some thoughts on it too.What he was telling us was that the resources that exist off South Africa's coastline are the equivalent of the diamond fields of Kimberley in their time, or the gold fields of the Witwatersrand basin, and that it could transform South Africa. So we, as BizNews, being a business publication, have thought: why isn't this happening? What is going on here?Why is it that Namibia, which has the same geology, is going ahead, and has been described as the most prospective district for oil and gas in the world? And then just to the south, it's sterilised all the way through until you get to Mozambique, which has similar geology and is really booming. So help us understand, in basic terms, for South African citizens looking at a country that is desperate for economic growth, desperate to get people into jobs, and desperate to bring our debt down: why is this the situation? Or was Lorimer exaggerating?Niall Kramer (05:47)Lorimer was not exaggerating. In my view, this is potentially as big as mining was for South Africa. As you know, mining is still the main driver of the economy, over many years, and oil and gas could be a complete catalyst for South Africa. We're struggling along at one percent growth, barely getting to that. Our peers in the developing world are getting three-plus percent economic growth. This could provide, if all plays were activated, significantly more than that.Let me give you some numbers, for those who remember these things. Mossgas, the old play, was one trillion cubic feet of gas off the South Coast. To date, only a fraction of that has been discovered, but there are potentially 260 trillion cubic feet of gas, plus 25 billion barrels of oil potential. That is across the West Coast, South Coast, East Coast and onshore. And the piece you referenced is called the Orange Basin, which has been proven in Namibia. The majority of that undersea basin is in South African waters — same geology — and everyone sees that Namibia is now the hottest development and investment destination in Africa. We have the same geology. Potentially we could have huge investment coming into South Africa from the largest players in the world.While there are often objections to those players, or people say we don't want them, the fact of the matter is we need energy. There is no prosperous, productive, comfortable society anywhere in the world, ever, that doesn't have good, reliable energy. Everybody knows how we've been struggling with energy. Yes, it's been okay for the past year or so, however—Niall Kramer (08:12) —a lot of that is because solar has gone onto people's roofs, and because factories and smelters have closed.Alec Hogg (08:18)Niall, we know all of this. Seriously, we know all of this. I don't think you're preaching to the converted here. I want to know why. Why has South Africa not got its act together? The case is closed on an economic perspective. But what is going on here that we aren't drilling?Niall Kramer (08:39)It might be case closed, but if you look at Namibia, again, it was not that difficult for people to become enthused, for a vision to be developed. Perhaps some of the difference is around leadership and the style of leadership. In the Namibian case, the oil and gas plays have been pulled directly into the president's office; they get presidential attention. We don't have that. We have the right noises being made, and the minister is making all the right statements and is very articulate and verbally supportive, but it's not following through into action.Our situation is a bit more complicated. The economy here is more complex, and our activity exists under three acts, not one, as it is in Namibia. We are under the MPRDA, the old act, which will soon become the UPRDA, the upstream bill, as well as the National Environmental Act and the Coastal Management Act, and all of these have processes that need to be followed across different departments. So there is bureaucracy behind driving all of this. But perhaps a bigger reason is that it's not a well understood industry. Although there are many people, in private, in the industry, who are able and willing to give input into what policy should be, what the regulations should be and how they should be activated, that input is not being welcomed. The depth of experience in the DNA of oil and gas is not that deep in South Africa. It's not like Norway, or the US, or the UK, or Australia, or many other countries, and that depth of understanding is really important to get a good feel for what this activity could bring to the economy. So there's perhaps inertia, perhaps a lack of understanding, perhaps some resistance to bringing private sector experience into government.Another reason is the cycles. Oil and gas is a long-cycle investment, whereas an election cycle is typically four years. We're talking about a ten-year-plus cycle on this kind of investment. It's a huge challenge for us, not being heard, not being welcomed into the room, when what we undoubtedly have, as you've referenced, is perhaps the biggest catalyst we've got: a clear and present opportunity.Alec Hogg (11:52)It's actually quite extraordinary, and thank you for unpacking it that way. If you go back decades, the late Tony Twine wrote a very strong pro-fracking piece for Econometrix. I remember at the time there was a lot of debate about it, and Tony, who was highly respected as an economist, said this would produce hundreds of thousands of jobs. That was fracking, onshore in the Karoo. There were certain interests who weren't too keen on that happening, and we know that's been sterilised. But this is now offshore, which is vastly bigger than what we could have had in the Karoo, and yet again, it appears to be sterilised. So what's going to break that logjam now?Niall Kramer (12:39)I think the West Coast judgment partly begins to break that, by pushing back on frivolous, vexatious challenges coming in, serially, from activists, along with a lot of misinformation and asymmetric discussion. Yes, you can put some of that blame at the door of industry too, for coming to meetings with a lot of techno-babble while activists come with an entirely different conversation. But the fact of the matter is we're going to need the energy, and it's important that we all start to have a more responsible, open conversation, and bring more symmetry into it. This is not about winning the battle. There is no battle. Somebody wins the battle, we lose the war. We are all going to need the advantages that come from this.You mentioned Tony Twine — I remember that study, I was involved at the time. Tony made a big point that applies to the offshore industry as well: it's not so much the jobs in the industry itself, it's the jobs in the downstream effects of having good, reliable, abundant energy.Alec Hogg (13:58)Now I'm wondering about the Wild Coast. Did anyone really talk to the people there? Anyone who's driven through that area will see — sure, there's money sent back from people from the area who work in the cities, but generally speaking it's not exactly a wealthy part of the country. You'd imagine that if billions of dollars were invested there, it could transform that part of the country. Did anyone talk to them ahead of this judgment, which now means, I suppose, they have to start from scratch again, and that could mean South African law taking a long, long time before anything happens.Niall Kramer (14:39)They did. Impact did this, what, over ten years ago, and then that play went over to Shell, who are now the owners, or co-owners, of it. The court basically said that in the interim, more should have been done, and that, I think, is potentially the nub of it. What does "more" mean? Who are the stakeholders? You're referencing people living at the coast who are not living a great quality of life — is a stakeholder who is in a local artisanal fishing community the same as somebody running a smelting plant up in Mpumalanga somewhere, who would benefit from having good, reliable energy? I don't think these matters have been properly unpacked.If you look at the amount of foreign currency that goes out for oil and gas that is imported into the country, the upside of having energy security, of having indigenous oil and gas, is huge, and the benefit is there for everyone. I think of Guyana, who have had huge success with their exploration and production over the past five to ten years, but they have a slogan behind that: a good life for all. That's the kind of vision I think we are lacking here. We can get to the detail, but if we are so entrenched in our existing positions, around environment, or jobs, or whatever it might be, we need to find common ground, a common language, a way to talk to each other, and a common vision. That simply is not there yet. We have some way to go. That's a leadership issue.Alec Hogg (16:57)What do you mean by that, "a leadership issue"?Niall Kramer (17:00)I think the president should be taking the lead, stepping up, talking about this, garnering support, indicating the economic upside. Treasury, the fiscus, should be looking at and talking about the potential inward investment upside. When you look at the kind of billions of dollars that could come into the economy off oil and gas, you only have to look at Norway as an excellent example of what it can do for everyone in a country. That's the sense in which I mean it's a leadership issue. The oil and gas projects are listed among the president's presidential projects, but we're not seeing action behind that. It flows through even to smaller things, like the promise of a one-stop shop. The amount of authorisations that explorers have to go through is huge, and they don't come here to enjoy the bureaucracy — they come here to explore, and potentially then to produce. That one-stop shop that was promised should be active and working, but it's not.Alec Hogg (18:29)We've seen the impact on the Mozambican economy, and the looming impact on the Namibian economy. There you're talking about twenty, thirty percent larger, as a result of the taxes that will go in. I understand it could double Mozambique's tax income. Everybody benefits when you have a resource. This isn't a hard story to tell, and that's what baffles me. If South Africans were told today what gold did for this country, how it lifted what was then a backward Boer state into a modern economy, and that they have the same opportunity with oil and gas, would they leave it in the ground, or would they exploit it — but look for ways to do it in an environmentally responsible manner? It doesn't seem like a hard story to tell, but there's such resistance. Are there bad actors who want the oil price to stay high, or want South Africa to fail, who might be behind this? Or is that just a conspiracy theory?Niall Kramer (19:55)There are many conspiracy theories around that. But we are going to need all forms of energy. People also talk about conspiracy theories around renewables, about actors wanting it all to go that way. The fact of the matter is we're going to need all the forms of energy, and it's not going to be one size fits all.To come back to your gold analogy: if we had never found gold, never had mining, and suddenly had to go through all of today's impact assessments and public participation processes to start mining diamonds, or gold, or even coal, you can imagine how tricky that would become, and how people would dig in over relatively small, local interests, without a good, well-articulated vision of what the bigger picture could do for everybody. To me, the policy issue is to untangle these policies, to align all of these acts and regulations with each other, but more importantly, to put that bigger vision out there, one that everybody understands they'll benefit from. We must stop fighting for short-term positions.Alec Hogg (21:26)That's a very interesting point. You can see why so many people in South Africa say, "let's just be like the Chinese and drive ahead and make the country more prosperous." But I like to close on a more positive note, Niall, and you mentioned the West Coast. I didn't know about the West Coast judgment, and I'd suggest many in the BizNews audience don't either. Take us through that story, and why it's a pointer in the right direction, given that it's clearly more optimistic than the East Coast judgment we've covered in some depth.Niall Kramer (22:04)So the High Court in the Western Cape found in favour of the industry, indicating that it had in fact done the consultation, had presented good information, and that the activists challenging the industry, who wanted to put a stay on further activity, were not doing so in good faith. The "spray and pray" approach was criticised heavily by the court.Again, that's one of the things: the court was talking about process, and that was exactly the same in the ConCourt judgment. They're both about process, but the future is still there. The geology won't change, and our opportunity still exists.Now, I know you want to end on an optimistic note, but here's something that must be considered: investors like this have options around the world. They're not going to stay forever, tied up in court, dealing with objections. While they are still here, we need to make them welcome, and provide something that is financially attractive and easy to navigate, or there are other options for them.Alec Hogg (23:41)That's the reality of life, isn't it? Capital is cowardly, and it will go to where it is made to feel most welcome. We as South Africans should be mindful of that; it's something that seems to have got lost in translation somewhere. But Niall Kramer, lovely talking with you. I'm sure we'll be talking more in future, because this is such a big opportunity we cannot ignore any longer, given where South Africa finds itself. And maybe with a government of national unity, there will be a stronger drive towards the economic realities we need to embrace, rather than some of the narrative that can often confuse the picture.Alec Hogg (24:30)Niall Kramer is the national spokesperson of OPASA. I'm Alec Hogg, from BizNews.com.