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BHP Billiton happy with South African 
government talks on offshore oil drilling
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6th March 2009
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Diversified miner BHP Billiton and the South African government are progressing in their discussions on the fiscal framework under which the drilling for oil off South Africa’s West Coast could proceed, new BHP Billiton Southern Africa chairperson Dr Xolani Mkhwanazi says.

BHP Billiton has had two oil exploration concessions off South Africa’s West Coast, and has aspirations to drill an exploration well in deep-water exploration blocks situated 175 km 
north-west of Cape Town.

These are Blocks 3B and 4B, where BHP Billiton has conducted two-dimensional and three-dimensional assessments.

Blocks 3B and 4B are said to cover an area of 21 630 km2, with water depths ranging from 300 m to 2 500 m.

The company is understood to have spent between $20-million and $30-million on its West Coast effort so far and has been negotiating with the various branches of the South African government for some time on exploration of the concessions.

It has been keen to carry out a West Coast drilling programme for some time, but has had to mark time until fiscal and regulatory certainty are attained.

Mkhwanazi, who assumed office on October 15 last year, tells Mining Weekly that the proposed project would be mutually beneficial.

“This has the potential to be good for both South Africa and for BHP Billiton, and will reaffirm our commitment to South Africa and the African continent, which we have always espoused,” he says.

The company is seeking long-term stability for itself beyond the exploration phase.

“As we have said before, we do need a long-term financial regime that is consistent over time, and government needs us to provide a long-term guarantee of our investment so that it can also benefit from the taxes,” he says.

“We are in ongoing talks and I think we are progressing although we still have some issues to resolve.”
Mkhwanazi, who has taken over from Dr Vincent Maphai, formerly headed BHP Billiton Aluminium as COO.

His responsibility would include leading the implementation of BHP Billiton South Africa’s strategy, the company’s transformation and sustainability agenda, and leading government engagement at all levels.

To watch a video on BHP Billiton South Africa chairperson Dr Xolani Mkhwanazi speaking about the prospects for oil exploration off the West Coast of South Africa, click here.

Edited by: Martin Zhuwakinyu


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