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Upstream Petroleum Resources Development Bill Under Construction

October 9, 2020

Department of Mineral Resources and Energy

Work on finalising the Draft Upstream Petroleum Resources Development Bill is at an advanced stage.

The mineral resources and energy department’s director-general (DG), Advocate Thabo Mokoena, revealed this during a virtual address to the Johannesburg Mining Indaba.

The DG reiterated that policy certainty in the mining sector is key for investment.

According to the DG, the department has held consultations with a broad range of stakeholders on the proposed legislation.

“We are confident that upon finalisation and implementation of this Bill, South Africa will be in a better place to strike a balance between the need to attract investment into this sector, and ensure that oil and gas activities do not happen at the expense of the environment and water resources”, he said.

The department also looks forward to increased investment due to investor confidence in current policies as “affirmed by the arrival of the Total commissioned oil and gas drill rig now on site off the coast of Mossel Bay in the Western Cape”.

The draft bill 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 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, providing for security of tenure in respect of exploration and production operations, ensuring 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”.

The DG declared that South Africa’s mining and mineral industry is open to investment throughout the value chain, from exploration to mineral beneficiation.

The department aims to “improve on the quality of information available for investors and meaningfully increase our share of global exploration expenditure to at least 3%”.

Plans are afoot to develop a comprehensive exploration strategy and boost administrative capacity in order to ensure transparency and reduce the turnaround times for the processing of mining, prospecting and environmental licences by 50%.