. The question was posed to PetroSA as to why have they not achieved their mandate, despite being in existence for over ten years. PetroSA's initial response was that the question be directed to the Ministry of Energy. The Chairperson however pointed out that the mandate is a public position. The follow-up question was what proportion of crude oil is currently imported to SA via PetroSA. PetroSA's response was that response is that they do not procure 30% of all crude consumed, in line with the Energy Security Master Plan of 2007. The refineries using crude, already has systems in terms of their procurement of crude and some supply themselves, e.g. BP. This new mandate has to be further developed. PetroSA added that the 30% procurement remains part of PetroSA's plans and that the NOC continues to work closely and consult the Department of Energy on the strategic stock petroleum policy, which is still in draft and yet to be finalised. . PetroSA stated that there are some highly prospective countries who have implemented internal programmes in subsidising, in relation to safer fuels, and such subsidies can drive down prices for the consumers, the country must be prospective in terms of resources, however, for this to happen. . Mr Takolia stated that his understanding of "upstream" is exploration happening domestically. The only current stream in South Africa is through Mossgas, which is the reason why he questioned whether there is enough of an upstream industry. Much of the current upstream industry work, such as the rig work, actually relates to regional activity in other areas, mostly in West Africa, but also South Asia. . Mr Takolia said that the current industry for engineering and pipeline and construction maintenance and support is worth about R20 billion, and that can be expected to grow to about R80 billion in South Africa. He repeated, however, that this comes mostly from servicing other projects in Africa. Whilst there is some domestic activity, mostly from refinery upgrades, final decisions whether to proceed with major upgrades had not yet been made. In the main, it is engineering and support services that are offered to the upstream industry. . Anardarko, South Africa, spoke to experiences in Mozambique, where the largest gas discoveries were made. This company moved into Mozambique in 2006 and discovered reserves of about 100 TcF. Anadarko pointed out that the local spend in South Africa, with the exploration project, was $550 million, and he emphasised that this is the spend in South Africa that flowed over directly to this country from what was being done in Mozambique. From that figure, it is possible to assess the spending from other projects. A lot of the spending was with local companies who were providing heavy engineering services, security services, aviation services and others. In 2013 there was also a R515 million spent also in supporting local businesses in Mozambique, but that came off quite a low base. The industrial base in Mozambique is smaller, but this was meaningful spending, and it will grow. In every country in which Anadarko operates, it will also spend on corporate social responsibility, including training, supporting health services, and other environmental matters. The project in Mozambique would mean, for the country, that Anadarko exports of 20 million tonnes per annum, or 400 000 tonnes of crude per day, and that is roughly equivalent to what South Africa was importing every day. . Anadarko then continued to point out what companies will require, in order to work in South Africa. The largest companies are mainly concerned with operating in countries where there is a reasonable regulatory environment, to allow them to achieve a reasonable rate of return, with stability. The projects last for about 30 years, and the whole continuum is looked at, not individual phases. That means that, over the long term, there has to be certainty and stability, and assurances are needed of reasonable and potentially good returns. . Badino Gas, said that this gas company was a "new mover" that had started recently, from scratch. Badimo stated that it was important to have had the introduction of the MPRDA, in 2002, because it allowed new industry regulation and particularly aimed to allow HDSAs to participate and play a role. Some HDSAs decided to do this but found themselves facing serious constraints, which include a lack of understanding as to the challenges and obstacles facing the new players. The whole idea is to allow new business to contribute to the GDP of the country. If a system is looking for investment, fresh ideas, and fresh capital to flow into the country, certain things had to be embraced, and that include the need for predictability and certainty. Badimo stated that the number of changes in the policy areas is creating uncertainty and flight of capital. Many of the new players did not have capital because the financial players do not understand the gas sector. Those from outside the country can go to capital markets in Australia and Canada, to raise their capital, and would end up buying out the smaller players and continue to dominate in this environment. . Mr Takolia referred to developments in the Saldanha Bay area. He pointed out that there are some good developments. The real potential, according to SAOGA, lies in bringing gas onshore and looking at fabrication and potential assembly of perhaps land-based rigs for shale gas. There might be gas pipes brought in from gas fields, should exploration prove economically viable, and it is possible to look at power generation offshore to alleviate the whole North/South power transfer. Saldanha Bay is an industrial development zone and there is a submission for it to be a customs control area, where companies will pay 15% instead of 25% tax, with job creation rebates and a whole host of other developments. If there is domestic exploration, onshore or offshore, it would enhance viability and potential of the country. . Mr N Adams, from a petroleum company, asked for some opinions on investment in petroleum. He is a director and founder shareholder of his company and plays a significant role in getting people to come and invest. Today, he is significantly more concerned and significantly less willing to put money in, given the current regulatory environment. He agreed that certainty is needed. Offshore exploration is already extremely high risk and it does not make sense to increase that with more regulatory uncertainty. Companies may be willing to gamble small amounts money but the further up the value chain, large amounts of money are needed to be committed, for longer periods. . Mr P Eardley-Taylor, Executive form Standard Bank said that they are talking to other people about the potential in this sector. Standard Bank is excited about the prospects, on paper, and believes that exploration could offer significant benefits to many people He noted that he would support and endorse comments made about the regulatory situation. Huge amounts of capital are needed in this sector. He noted that nobody had yet touched upon "the elephant in the room" - which was the route for gas to the market. There were state owned entities, such as PetroSA and Transnet, who are suppose to be dealing with that. There are certain economic benefits to be gained overall from exploration. Standard Bank has put together its own set of data, with calculations by economists, and these projected that if South Africa were to make finds equivalent to those in Ghana, it could wipe out the whole deficit of foreign payments in one year. The shale gas blocks could, on estimate, create 210 000 jobs per block. One of the points not yet raised was the sheer scale of expenditure through exploration activities that would take place, domestically, which would create more jobs and opportunities for HDSAs. . Ms Reinet van Zyl, Energy Manager, ArcelorMittal (Saldanha Plant), said that her company, being in the manufacturing and beneficiation arena, is hungry for affordable fuel sources. It is not just having the energy that matters, but getting a fuel source that is competitive to the coal-based sources. If gas is found, the opportunities will be vast, and would unlock beneficiation. The question is the time line. There is clearly some activity and movement, but the question is how long it might take before there is a commercial gas source in Saldanha. Another question related to price. She said it is necessary to consider how this might be expedited. She noted the earlier statements that an exploration company may have to drill 21 wells before finding one that was commercially viable, but noted also the lack of infrastructure as a major concern. Ultimately, these developments are there, but South Africa is not yet positioned to take advantage of any opportunities immediately, and she felt that such positioning and preparation is crucial. . Mr L Greyling (ID) said that there are obviously huge potential, which is why so many industry players chose to attend this session. He thought that more than anything, policy certainty is needed and made the point that policy should not act as a disincentive. The policy and legal environment must be right so that people are willing to put money into long term investment. The Mineral Petroleum Resources Development Act (MPRDA) is another "huge elephant in the room", although he appreciated that the industry players are probably not willing to air their criticisms as at the end of the day they had to apply for the licences. However, that is not something that he believes will be resolved any time soon, as the amendments to the MPRDA will most likely not be passed by this Parliament, and there are still many points to get right. The next Parliament should be asked to make this a number one priority, and to get the regulatory and legal frameworks right, to show benefits for industry players. . Mr Greyling further pointed out that other useful aspects raised related to the issues around the Energy Master Plan and the IRP updates. The amount allocated to gas at this stage is probably too small to generate the infrastructure investment required, such as Liquid Natural Gas terminals and pipelines down the coast. . Sasol said that some valid points were made. Sasol indicated that they would want to see a more integrated approach, and by integration, it means between the government departments of Energy, Mineral Resources, Science and Technology, Trade and Industry and National Treasury, to ensure that policy formulation is cohesive and made in the right context. According to Sasol, Mr Mkhize (DoE) said there are challenges, but that they can be overcome by involving industry earlier in the process of consultation. The right term to use is actually "collaboration" rather than "consultation". . Mr Kerwin Rana, CEO, Sunbird Energy, explained that Sunbird is developing a gas field off the West Coast. In the Orange Basin, over R1 billion has been spent, with eleven wells drilled and four has been production facilities. Sunbird is aiming for first gas in 2018, which means financial close roughly in 2015. He said that this Basin has been a great regulatory success for PetroSA and Sunbird. South Africa is such a mature mining environment with thousands of boreholes drilled, and this makes it surprising that the hydrocarbons are under- explored.