Mineral and Petroleum Development Bill grabs resources

The state muscles in…

offshore gasThe Mineral and Petroleum Resources Development Amendment Bill, approved by the cabinet in May, has now been tabled in Parliament and sections 80 and 84 of the anchor Act are to be amended, it is proposed, to provide for State participation in petroleum development carried out by the private sector.

The draft bill was published for comment in December 2012 and the proposed legislation, other than to extensively address the issue of re-describing many definitions and include petroleum and petroleum products in many of the issues covered by the Act such as beneficiation, also regulates extensively the exploitation of minerals and the legal movement and transfer of resource rights.

The new Bill also aligns the MPRDA with the newly assented Geoscience Amendment Act and “addresses shortcomings identified, whilst simultaneously streamlining the administrative processes in relation to the regulation of the mining environment management function”.

“New entity” to be formed

Two issues are of note in that under section 71 of the new Bill it is proposed that the minister forms a “new entity” which will “promote onshore and offshore exploration for and production of petroleum” and which will also “receive, store, maintain, interpret, add value to, evaluate, disseminate or deal in all geological or geophysical information relating to petroleum submitted” of the anchor Act, the MPRDA.

The new entity (and it is to be assumed those involved in “exploitation” of minerals and petroleum must through such an entity) must, it is proposed, “ bring to the notice of the Minister any information in relation to the exploration and production of petroleum which is likely to be of use or benefit to the state”. This clause will no doubt cause debate.

The background to the Bill clearly states that in terms of the new proposals, Sections 80 and 84 of the anchor Act are amended to provide for the state participation in petroleum development as described and that the state “has a right to a free carried interest in all new exploration and production rights”.

The proposal that matters

Section 84 of the MPRDA is further amended to include State board participation in the holders of production rights in terms of the proposals.

Section 2.9 of the background giving policy views also underlines the concept that the state will “exercise its rights and options having evaluated the applicable finance modalities to prioritise and optimise state participation in petroleum exploitation and in line with the national developmental priorities.”

The newly tabled Bill states that “specific details regarding the extent of the State’s free carried interests” will be published in a government gazette.

More background articles on subject
http://parlyreportsa.co.za//energy/south-africa-at-energy-crossroadsdoe-speaks-out/
http://parlyreportsa.co.za//energy/draft-mprda-bill-for-comment/

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