Tag Archive | minerals and petroleum resources development amendment bill

Uncertainty in oil and gas exploration industry

Oil and gas industry criticizes MPRDA Bill…

Government’s definition of what an  oil and gas industry stakeholder is and the continuous use of that mysterious word “player” have both come in for some serious investigation after the recent hearings into the Minerals and Petroleum Resources Development Amendment Bill, which aims to grab a stake in oil and gas exploration industry and combine the BEE charters of both the mining and liquid fuels industry with regard to employment and beneficiation.

The minister now announced that the state will be able, it will be pr0posed, to acquire at first 20% in successful gas exploration ventures  without capital outlay (called “free carry”) and subsequently 50%.

In the case of this Bill tabled in Parliament, after public comment, participation with industry stakeholders, such consultation with stakeholders has been claimed by the minister involved both in print in the written background to the Bill as part of the tabled document and by the departmental of mineral resources in  briefings to the portfolio committee concerned.

Generally, liquid fuels companies are concerned at the suggestion that if both BEE charters are combined it is like “combining water and oil”, to quote one member, since the mining industry is more labour intensive with massive capital outlay and the liquid fuels industry is twice as capital intensive but with less manual labour involved but greatly higher risk issues in capital outlay.

According to a number of oil and gas industry exploration companies vitally affected by the proposals contained in the Bill, any discussions with the gas exploration industry  has neither happened nor were they even notified.

State participation

Considering the fact that the Bill proposes acquisition by legislation of shareholding in those companies and regulations, as yet unpublished, will vitally affect not only their balance sheet but whether they enter into ventures in the first place, makes this is extraordinary.

One imagines that not only are eyebrows raised in the international world of trading and investment but some unfortunate comparisons made to other failed states in Africa.

Certainly there is a fear of exploitation in Africa and not without undue reason. Also it was hoped that one set of reasonable rules, known well ahead, would bring the kind of certainty that was needed to key worldwide industries and this would bring in turn South Africa to the top of list in investment destinations in an otherwise very unstable and avaricious stable of governments to our North.

Lack of certainty

From what has been said during the hearings on the Minerals and Petroleum Resources Development Amendment Bill, the minister would seem to be way off mark with this new Bill, some of those making submissions saying it was the first time they got their voices heard and others stating that some of the conditions are outrageous.

Whilst the terminology “hearings” is used for such sessions after a Bill is tabled, we just hope that the minister is listening.

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