South Africa

Investment & Operational Criteria

Key Indicators

Risk Premia

9.500

%

Outlook

Negative

Rating

C|4H|-

Ranking

82

Reserves (1P)

Total

mm boe

Oil

100

%

Summary

The government continues to impose headwinds to foreign investment, especially in the natural resources sectors. More needs to be done to enable the country to leverage is recent exploration successes. However, this is becoming increasingly overshadowed by what is being seen as rampant corruption. Given this, we have raised our risk premia to 9.5%.

Updated

February 4, 2024

Country Basics

Region

Africa - South

Reserves (1P)

Oil

mm bbl

Gas

bcf

Location

South AfricaSouth Africa

Southern Africa, at the southern tip of the continent of Africa.

Outline

Tax Regime
Type

Concession

Tax Regime
Notes

Concession-based fiscal regime. The state has the option to participate in upstream developments, through PetroSA, with an interest of up to 10%. There is also a maximum 10% farm-in provision for Black Economic Empowerment (BEE) companies at pre-defined commercial terms.

Investment & 
Operational
Climate

One of the biggest challenges to investment is persistent “loadshedding,” South Africa’s term for rolling blackouts. The country experienced loadshedding more than 200 days in 2022 and almost every day thus far in 2023. Lack of access to reliable power cripples economic growth and is a top concern for investors. The International Monetary Fund (IMF) recently downgraded its GDP expectations for South Africa’s economy to 0.1% in 2023. However, the South African Reserve Bank lowered its forecast for GDP growth in 2023 from about 2.6% to 0.3%. Other challenges include policy uncertainty, lack of regulatory oversight and enforcement, state-owned enterprise (SOE) drain on the fiscus, widespread corruption, violent crime, labour unrest, lack of basic infrastructure and government service delivery and lack of skilled labour.

Source: ESRI, Heritage Index, HMG Foreign & Commonwealth Office, US Department of State, International Trade Administration, International Law Review, Ernst & Young, Wood Makenzie & OGA data.

© 2024 Oil & Gas Advisors Limited
Website by Rugby Web Design