In that context, South Africa is unique because it has an emerging upstream sector, which is still immature in terms of exploration. In contrast, the midstream and downstream sectors are mature, but still require reinvestment.

So that is the lens through which we view the overall domestic oil and gas sector, and it is very different from some other markets in sub-Saharan Africa. Most of our clients in upstream are at the pre-exploration stage, but as a bank we have served the upstream sector by sharing our research-based knowledge with private and public stakeholders in South Africa.

To what extent is South Africa’s upstream sector attractive to local and international investors?
There are two ways to look at the attractiveness of this upstream market. If you look at the list of companies who have interest in potential offshore blocks here, you will see companies like Exxon Mobil, ENI, Statoil, Qatar Petroleum, Total and Anadarko.

From this perspective, there is clearly something attractive about the geology to these operators. From the perspective of the capital markets, I think the big-ticket capital requirements will be met by international capital rather than the local markets. This is because there is a better appreciation of the risk, though one or two South African players may have some appetite for specific assets.

Upcoming changes to legislation will also play its part in the overall attractiveness of our oil and gas sector. The Minerals and Petroleum Resources Development Act (MPRDA) 28 of 2002, is the primary legislation governing the upstream minerals sector in South Africa.

Looking at some of the amendments that have gone through to the National Council of Provinces – relating to black economic empowerment, beneficiation requirements or the free carried interest for the state, for example – it could have a positive impact on the sector and the signals are encouraging. In fact, I am happy to see the level of consultation of stakeholders throughout the process.

What impact will oil price volatility have on South Africa’s upstream sector?
Oil price volatility is not South Africa specific. Research on the global oil and gas sector suggests that upstream investment is still feasible and attractive at prices of between $60 and $70 per barrel. However, while the dip in oil prices we saw from 2014 resulted in capital expenditure cuts, it also meant that many exploration and production companies restructured to be able to be profitable at lower global oil prices.

From a local perspective, long-term price stability at reasonable levels is what will support interest in our offshore assets. Standard Bank is doing research into the sector’s specific operational challenges, which can arise from oil price volatility, as a means of understanding the long-term landscape for clients.

I should add that in South Africa we are not yet at the stage of upstream capital expenditure, and so the current volatility may not affect us directly in the upstream sector. However, as a consumer in downstream, we are affected.

Where do you see the greatest growth potential in the downstream sector?
Since South Africa became a net energy importer in early 2009, the issue of storage as a way of creating efficiencies has become more important. Standard Bank participated in the R500 million financing of Burgan Cape Terminals in Cape Town.

This 18,000m3 fuel storage terminal project, situated in the Cape Town Harbour, is the city’s first independent oil storage and distribution terminal. We are likely to see a lot more investment in storage infrastructure over the next three to four years.

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