Back to the drawing board in South Africa

25 September 2018, Week 38, Issue 756

South Africa has withdrawn draft legislation set to govern the petroleum and mining industries. It now plans to create separate laws for each sector, South African Communications Minister Nomvula Mokonyane said on September 20.

South African Mineral Resources Minister Gwede Mantashe – who said in August he believed the current law governing the mining industry should remain in place, but with petroleum legislation amended separately – has now withdrawn the long-delayed Mineral and Petroleum Resources Development Amendment (MPRDA) Bill. This move is supported by the cabinet, Mokonyane said.

The bill had generated controversy on a number of points, including requirements for local processing of minerals and free-carry provisions on oil finds. It would have handed the state a 20% minority stake in new oil and gas exploration and production ventures – a point that South Africa’s oil industry had warned would discourage investment.

The Offshore Petroleum Association of South Africa (OPASA) – whose members include ExxonMobil, Total, Royal Dutch Shell, Anadarko Petroleum, Eni and Equinor – will support a separate act for the upstream petroleum industry “that will encourage and unlock investment”, said its chairman, Sean Lunn.

Developing a separate legal framework specifically for the oil and gas sector, rather than building an appendage to the mining sector framework, should be supported by oil and gas companies and provide them with “certainty,” Mantashe said late last month.

Not everyone will be happy at the MPRDA’s demise. The inauguration in February of South African President Cyril Ramaphosa, and his subsequent appointment of Mantashe as Mineral Resource Minister, was expected to accelerate passage of the bill, which had already been before the legislature for five years.

There had been hopes that the bill would be passed this year, leading to a flurry of prospects progressing to drill stage as investors gained more certainty.

Of particular interest are the Brulpadda prospect, where the Brulpadda-1AX well is scheduled to be drilled before the end of the year. Africa Energy also aims to drill an exploration well in Block 2B on South Africa’s western coast in 2019. 

Edited by

Ed Reed

Editor

Any questions? Please get in touch