Department of Mineral Resources and Energy
7 January 2020
Draft legislation designed to make provision for equitable access to and sustainable development of South Africa’s petroleum resources was published for comment in December 2019.
The mineral resources and energy department published the Draft Upstream Petroleum Resources Development Bill in Government Gazette 42931 on 24 December.
The draft bill aims to:
• make provision for equitable access to and sustainable development of the nation’s petroleum resources;
• provide for orderly development of petroleum resources, to create an enabling environment for the acceleration of exploration and production of the nation’s petroleum resources, to provide for active State participation in the development of the nation’s petroleum resources;
• provide for black person’s participation in the upstream petroleum sector;
• provide for the establishment of the Petroleum Agency of South Africa as the national regulatory authority for the upstream petroleum sector;
• provide for the objectives and functions of the Agency;
• provide for the constitution of the Board of the Agency, the appointment of the Chief Executive Officer of the Agency, the staff and the finances of the Agency;
• provide for the designation of PetroSA as a National Oil Company; and
• provide for matters connected therewith.
Some of the objectives of the proposed legislation include recognizing the right of the state to exercise sovereignty over all petroleum resources in South Africa, promoting equitable access to the country’s petroleum resources, facilitating participation by black South Africans in the upstream petroleum sector, provide for security of tenure in respect of exploration and production operations, ensure that holders of production rights contribute to the socio-economic development of the areas in which they are operating and encouraging and promoting national development of petroleum resources by speeding up exploration and production.
The draft bill stipulates that the state has, via PetroSA, a right to a 20 percent carried interest in exploration and production rights.
It also declares that all applications for exploration and production rights must be accompanied by a shareholders’ agreement indicating the State carried interest.
The mineral resources and energy minister will also be able to “reserve a block, part of a block or blocks in an open area for national developmental imperatives”.
Comment is invited until 21 February 2020.
Meanwhile, in Gazette 42915, the department announced the lifting of the restriction or prohibition on the granting of applications for reconnaissance permits, technical cooperation permits, exploration rights and production rights for onshore areas in South Africa.
The lifting of the restriction on oil and gas exploration does not include Area A located in the Karoo Basin.
Earlier in December, the department also published a Request for Information (RFI) to assess electricity generation options in the short term.
The RFI focuses on the design of a risk mitigation power procurement programme.
“The RFI is intended to analyse options to procure between 2000 –3000 MWs of power generation capacity that can be grid connected in the shortest time at the least possible cost.”
Responses are invited until 31 January 2020.