South Africa’s National Assembly (NA) has passed the Upstream Petroleum Resources Development Bill. It will now go to the National Council of Provinces, the upper house of the legislature, for approval.
The bill went to the Mineral Resources and Energy committee in July 2021.
The official notice on the bill said it aimed to split off petroleum operations from minerals. It also aims to secure economic transformation and “enhance the participation of black persons and the state in the upstream petroleum industry”.
The bill, the NA said, will promote development in a “sustainable and equitable” manner for all South Africans.
A reaction from the Democratic Alliance’s MP James Lorimer criticised the bill. The new upstream regulations would drive “investors away from the promising new oil and gas industry”.
Natural Justice, earlier this year, said the new law would exacerbate the climate crisis and would contravene South Africa’s commitments to tackle climate change.
However, the South African Oil & Gas Alliance (SAOGA) said approval from the NA was “one step forward in the correct direction”.
The new bill sets out terms for exploration licences, for instance. Onshore and shallow water licences will have an initial term of three years and up to nine years for exploration. Frontier and deepwater will have an initial term of five years and up to 14 years for exploration.
It would also set up a new Petroleum Development and Environmental Committee.
Black people must have at least a 10% stake in each petroleum licence, the bill specifies. The bill allows the minister to reserve a block or blocks for black people, while also inviting applications solely from black people. These blocks cannot have black ownership diluted beyond 30%.
The bill also sets out a role for the State Petroleum Company. This will have a 20% carried interest, with its share of spending recoverable from its share of production.
Some existing upstream participants, such as Africa Energy, believe their licence would not be changed by the new upstream bill. The company is a junior partner in Block 11B/12B, which is operated by TotalEnergies.
Updated on October 30 to reflect Africa Energy’s perspective that the licence is grandfathered.