Oil and Mining Laws in South Africa May Be Split, Minister Says

South Africa should consider drafting separate laws to regulate the fledgling oil and gas industry to encourage investment, Mineral Resources Minister Ngoako Ramatlhodi said.

Proposed changes to the 2002 Mineral and Petroleum Resources Development Act include giving the state the right to a free 20 percent stake in all new energy ventures and buy an unspecified additional share at an “agreed price.” Exxon Mobil Corp., Anadarko Petroleum Corp. and Total SA are among those that have objected to the law on the grounds that it is too vague and will undermine their businesses.

“It might make a lot of sense” to split the provisions for oil and gas from those regulating mining, because the industries are at different stages of development,’’ Ramatlhodi told reporters in Cape Town today. “I’m not aware of a firm decision” as to whether this will happen, he said.

The amendments were passed by Parliament earlier this year. Ramatlhodi asked President Jacob Zuma to hold off on signing them into law pending a review by a committee comprising himself and the ministers of finance, trade and industry, energy and economic development.

The law can only be referred back to Parliament if its constitutionality is in doubt, even if the government is concerned that some of the proposed policy changes are inappropriate, Ramatlhodi said.

Speed Needed

“If it is not referred back and it is signed into law, what we propose to do is to begin to open a discussion on the regulations” that will accompany the law and cap the state’s interest in energy projects, he said. “Whilst there is need for certainty of policy, there is a need to move with speed to begin to get certain things done. We have the draft regulations, they are ready for stakeholders to engage.”

While South Africa had proven reserves of 15 million barrels of oil at the end of 2013, according to Oil & Gas Journal, there is no significant production. About 70 percent of the nation’s crude needs are met through imports with the balance processed from coal and gas.

“We’ve already completed our work commitments for the current exploration phase in South Africa,” John Christiansen, an Anadarko spokesman, said in an e-mailed response to questions yesterday. “We are utilizing this time to incorporate the new data into our geologic model, monitor the political process and work with the South African government to gain clarity on the new petroleum laws.”

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