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2 March 2012

Econometrix, South Africa’s largest independent macro-economic consultancy, has released a study on the potential economic and employment benefits of a successful natural gas development in the southern Karoo basin.  The report focuses on two conservative scenarios:  20 trillion cubic feet (tcf) and 50 tcf. The US Energy Information Administration (EIA) has previously estimated the potential shale gas resources in South Africa to be around 485 tcf.  

Bonang Mohale, Chairman of Shell South Africa, said: “This report clearly shows the substantial economic and job creation benefits to South Africa, should economically viable gas resources exist in the Karoo. The shale under the Karoo may well provide the game-changing opportunity that South Africa needs. But the only way of conclusively establishing what lies below the Karoo basin is for exploration to go ahead.

“This study is a critical part of our commitment to provide South Africans with factual, statistical evidence that demonstrates the kind of potential that natural gas development can unlock for the country. If exploration confirmed there was 20 tcf in the Karoo that could be commercially produced, this would have the potential to supply more than half of all our energy needs in South Africa for 20 years at current capacity.”

“Shell remains committed to a continued dialogue with all parties on the potential development of natural gas resources. 

Shale gas development and production does not yet exist as an industry in South Africa.  The economic impact report, the first of its kind, addresses some of the challenges South Africans face, as highlighted in the National Planning Commission (NPC) report of November 2011. Shale gas development (if recoverable and in viable quantities) can address job creation, benefit the poor in South Africa, stimulate the economy and secure energy supply for South Africans. 

The Econometrix report estimates that a relative conservative find of 20tcf could have an annual economic impact of ZAR80 billion and at 50tcf the impact on the South African economy could be a high as ZAR200 billion. Hundreds of thousands of sustainable employment opportunities could be created and have a knock-on effect on producers, government and consumers. 

In addition to direct and indirect job creation, the Econometrix report also explores the link between energy supply and economic growth and performance, as evidenced by the negative impact on the South African economy of rising electricity prices and blackouts. Shale gas could ease the energy deficit, making it cheaper for the country to grow and ensuring a stable electricity supply.

Last month, Ipsos released a national polling research report (commissioned by Shell) based on the views of over 2,000 South Africans who were interviewed (face-to-face) on the exploration of natural gas in the Karoo. A key finding was that when introduced to the concept, respondents were in favour of determining the presence of gas in the Karoo but that they would like job creation, economic development and environmental issues to be addressed. 

The Econometrix research was conducted on behalf of Shell.