Upstream oil and gas authorisation in South Africa

22 Feb 2017

The South African oil and gas industry is small by global standards and, despite promising onshore and offshore prospectivity, the country’s acreage remains largely underexplored. The advent of a vibrant domestic industry has not been curtailed by geological factors but rather by a combination of above-ground concerns including, amongst other things, ongoing legislative and regulatory uncertainty.

The primary legislation governing the upstream sector, which also covers the mining sector, is the Mineral and Petroleum Resources Development Act 28 of (2002) (“the MPRDA”). Under the MPRDA, the Minister of Mineral Resources (“the Minister”) is empowered to authorise companies to explore for, and produce, oil and gas. Since 2013, significant amendments to the MPRDA have been proposed via various iterations of the Mineral and Petroleum Resources Development Amendment Bill 15 of 2013 (“the Bill”).

In November 2016, the Department of Mineral Resources (“the DMR”) provided the National Council of Provinces (“the NCOP”) with a table of proposed changes to the Bill and, although the changes differ significantly from the most recent version of the Bill, they are understood to represent an agreed position between the oil and gas industry and the State.

Although the manner in which the proposed changes have been introduced raises questions of due process, what follows is a synopsis, from a commercial perspective, of the most significant of the proposed changes, namely, those that apply to section 86A of the Bill.

For an overview of the history and status quo of South Africa’s upstream oil and gas industry see Bowmans’ recent chapter in Global Legal Insights: Energy 2017, 5th Edition (“GLI: Energy 2017”).

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)