Africa Oil & Gas: South Africa lifts moratorium on oil

Mineral Resources Minister Gwede Mantashe has announced he will amend the moratorium currently in place for the oil and gas sector, to allow for the processing of applications currently in the system.

The moratorium, which was originally put in place in June, restricts the granting of applications for technical cooperation permits, exploration rights and production rights until a notice of invitation for applications is published.

Mantashe told an oil and gas investor event, in Cape Town, that the path needed to be cleared for companies to invest in the oil and gas sector.

“We can’t delay exploration. We know the sector has been worried. We want to accelerate investment and boost investor confidence in the economy. The amendment will ensure that applications currently in our system are processed and granted.”

The regulatory uncertainty has caused investments to stall.

Meanwhile, Mantashe said he was very happy that Total would resume its drilling operations on a deepwater exploration well in South Africa.

“We welcome the commitment by petroleum giant Total and its partners to resume its drilling operations, which affirms confidence in South Africa as an investment destination for exploration of oil and gas.” He said the drill rig for the project is making its way from off the Namibian coast and is expected on South African shores by December 5.

“When that rig arrives, we can prove that we are serious about oil and gas.”

Mantashe also told investors that the development of separate legislation for oil and gas, from that of mining, was under way and that the draft Bill would be the first to be introduced when the sixth Parliament begins next year.

“Let’s do the basic work for the Bill to ensure that it is one of the first Bills to be introduced in the sixth Parliament.”

The Minister suggested that his department should share the draft Bill with the industry. “The industry should have sight of the draft so that we strengthen the areas in which we are weak, rather than waiting too late in the process.”

He said separating mining from oil and gas was essential.

“Mining is an old, conservative, dominant industry. If we leave oil and gas as an appendage of mining, it will continue to be in the shadow of mining and be dominated by it.”

Mantashe also called for more investment in the industry and said exploration should not be held back by black economic empowerment (BEE) requirements.

“Everyone should be able to do exploration. Once we find the deposits then we can grow the industry. At that point we can begin to talk about BEE.

“You can’t delay exploration because you want BEE and transformation targets at the exploration point. BEE targets are more important at the production point where you begin to generate wealth. That’s when the targets should be set.”

He said the government had to do all it could to get out of the cycle of low economic growth.

“We must break this accepted notion of a low growth trajectory . . . where we celebrate when we achieve 1.3% growth in the economy, while our peers are growing at 5% or above.”

He said oil and gas had the potential to become a major sector in South Africa.

“Work with us to develop and grow it fully,” Mantashe urged investors.

“We cannot invite investment in our country and be discriminatory in outlook and language against those investors.”

Mantashe said BEE should be meaningful and that companies should not expect “quick cash” and easy deals in the oil and gas industry.

“It doesn’t work if people are given something on a silver platter. In my experience in mining, when share prices go up, some of these companies sell out and leave. But if they struggle and put a lot of effort into the industry, they will stay.”

“BEE partners must not be given gifts by the State. We can’t babysit them. They must invest, they must look for resources, they must be indebted, they must work hard.”source:

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