While Africa recorded a strong uptick in oil and gas capital flows in recent years, South Africa has struggled to convert policy talk into timely, bankable projects.
Investors are increasingly choosing clear regulatory regimes and fast-track offshore plays in countries such as Mozambique, Senegal and Tanzania leaving South Africa at risk of missing out on a wave of upstream and LNG investment.
Why Africa is Seeing a Fresh Surge of Oil & Gas Investment
Global energy dynamics from Europe’s search for diversified gas supplies to durable LNG demand have pushed private and state capital back into African hydrocarbons.
Major offshore discoveries and new export-focused LNG buildouts have produced a notable jump in continent-wide capital expenditure and exploration activity. Analysts project rising African output through 2026 as several large projects come online.
What’s Holding South Africa Back?
Several interlocking factors explain why investors remain cautious about committing large upstream or midstream capital in South Africa:
- Policy and regulatory uncertainty.
Repeated legislative changes and a transitional regulatory environment have left investors unsure about licensing stability, local content rules and cost-reflective tariffs. - Slow permitting and bureaucratic delays.
Long lead times for exploration rights, environmental approvals and community consultations increase project risk and financing costs ,especially for high-capex offshore and LNG facilities where schedules are tightly linked to global contracts. - Social licence and climate politics.
Campaigns from environmental groups, a stronger national debate about a “just transition,” and litigation or reputational risks raise the political and commercial cost of new hydrocarbon projects in-country. - Infrastructure and logistics gaps.
South Africa needs new regasification capacity, pipeline upgrades and port logistics to support large-scale gas imports or domestic distribution. Investors often prefer countries already sequencing infrastructure buildouts with clear commercial partners.
The Paradox: Appetite for Gas But Not Always in South Africa
Paradoxically, major oil & gas players see South Africa as a promising market for LNG imports and gas-fired power as the country shifts from coal but they want concrete, bankable infrastructure plans before committing long-term capital.
Longer-term risk: if South Africa cannot translate interest into timely projects, investment and jobs may flow instead to faster-moving African neighbours, accelerating a regional shift in supply chains and services.
What South Africa Could Do to Regain Investor Confidence
- Fast-track clear regulations — publish final upstream and petroleum regulations with multi-year stability commitments.
- One-stop permitting desk — reduce approval lead times by coordinating environmental, maritime and community consents.
- De-risk projects with public–private support — government guarantees, anchor off-take deals, or limited sovereign equity can attract institutional investors.
- Prioritise gas infrastructure — targeted investment in regasification and transmission will convert demand signals into contracted projects.
- Transparent local content and benefit-sharing — clear, predictable requirements reduce renegotiation risk and build social licence.
Also read: How the GTA LNG Project Balances Energy Growth with Environmental Sustainability in West Africa
FAQs
Q: Is there still demand for gas in South Africa?
Yes. As the country seeks to reduce coal dependence, gas, particularly imported LNG paired with local distribution, is widely seen as a transitional option. Major firms are studying demand and importing infrastructure opportunities.
Q: Are investors leaving Africa?
No overall investment into African oil and gas rose in recent years, with new projects and offshore discoveries attracting capital, though flows favour jurisdictions with clearer rules and faster delivery.
Q: Could South Africa still attract big projects?
Yes with clearer regulation, faster permitting, and targeted infrastructure investment, South Africa can convert commercial interest into projects. Timeliness and predictability will be decisive.