Upstream Petroleum Resources Development Bill: Public Hearings

Meeting report

Stakeholder inputs on Upstream Petroleum Resources Development Bill

Offshore Petroleum Association of SA (OPASA)

Prof Michael Dale, Mining Lawyer, and Representative of the Offshore Petroleum Association of SA (OPASA), and Dr Alison Futter, Chair: Tax and Finance Sub-committee, OPASA, presented the entity's input on the Upstream Petroleum Resources Development (UPRD) Bill.

The main points of the presentation were:

A very innovative and positive feature was the inclusion of a petroleum right regulating exploration and production. However, any replacement Bill created uncertainty and instability in its departure from an existing Act with which investors were familiar.
A negative feature was that the conversion mechanism created a new opportunity for interference by third parties and jeopardised the security of tenure, which was an object of the UPRD Bill.
The UPRD Bill required multiple administrative decisions at every project step. It deviated from the system for prospecting and mining of minerals.
Black Economic Empowerment (BEE) required a minimum of 10% of black persons participating in interest in petroleum rights, and there should be Petroleum Agency discretion for extensions from time to time.
The entity recommended that various clauses in the UPRD Bill should be removed, such as overlapping competences clauses, unconstitutional clauses, and clauses stipulating that the Petroleum Agency may directly increase or decrease the production rate.

(Please visit the presentation for details of OPASA recommendations)

SA Oil and Gas Association (SAOGA)

Mr Adrian Strydom, Executive Director, SA Oil and Gas Association (SAOGA), recommended that legislative uncertainties be removed and an attractive exploration proposition be included. The entity also recommended that there should be flexibility in the provision for the 20% carried state interest and the minimum of 10% black participation on commercial terms. Further, there should be clarity regarding the transitional arrangements and timelines for current licence holders.

(See submission for further details.)

Green Connection (GC)

Mr Kholwani Simelane, Advocacy Officer, and Mr Adrian Pole, Attorney, GC, delivered the presentation.

The entity welcomed the Committee's efforts to engage civil society on the UPRD Bill. However, the GC requested that there should be meaningful consultation. The comment period was too short, given the length and technical complexity of the UPRD Bill.

The GC recommended that the UPRD Bill provide an appropriate framework for a rapid and just transition away from fossil fuel extraction, production, and use. There should be a transition towards ecologically sustainable renewable energy. It also suggested that the UPRD Bill must incorporate South Africa's international climate change commitments and align with the Climate Change Bill.

(See submission for further details.)

Imbokondo

Ms Miranda Anthony, Representative, iMbokodo Exploration and Production, said the organisation supported the government's broad initiatives as prescribed in the UPRD Bill. However, clear and definitive commercial terms were needed to ensure that there was an incentive for investment.

The entity recommended that the inclusion of BEE companies was critical. It also suggested that upstream oil and gas should play a significant role in the economic growth and development of South Africa. It added that a strong and vibrant oil and gas industry could assist in addressing the critical socio-economic challenges that the country faces.

(See submission for further details.)

Ocean Economy Task Team (OETT)

Dr Alison Futter, Representative: OETT and Chair of the Tax and Finance Sub-committee, OPASA, delivered the presentation.

She said the current definition of carried interest did not make provision for a carried interest allocated to black persons. Further, the UPRD did not make provision for carried participation in terms of black persons. It was onerous for black persons to fund their participation in the exploration and development of a petroleum right. The entity suggested that every petroleum right must have a minimum of 10% undivided participating interest by black persons, of which up to 5% was a right to carried interest.

(See submission for further details).

Department of Forestry, Fisheries and Environment (DFFE)

Ms Vanessa Bendeman, Deputy Director-General: Regulatory Compliance and Monitoring, DFFE, and Ms Amanda van Reenen, Director: Legal Support, National Environmental Management Act (NEMA), DFFE, delivered the presentation.

The Department acknowledged that the UPRD Bill had significant implications for environmental legislation, specifically the NEMA and subordinate legislation, such as the environmental impact assessment (EIA) regulations, financial provisioning regulations, and the proposed hydraulic fracturing legislation.

The DFFE was concerned that there was no current provision for petroleum rights in any environmental legislation, nor transitional arrangements to fill the gap. Environmental requirements associated with petroleum exploration and production should be managed and provided for in terms of the NEMA.

The main points of the presentation were:

Transitional provisions should be added to the UPRD Bill to indicate that a reference to exploration and production rights in other legislation (such as NEMA) should be read as a reference to the newly created petroleum right.
The environmental authorisation and other environmental requirements in the UPRD Bill should be deleted and replaced with a provision indicating these were to be provided for in terms of the NEMA.
The DFFE recommended that the timeframes contained in the UPRD Bill should instead be deleted from the Bill and included in the regulations to avoid misalignment, enable coordination of processes, and provide flexibility.

(See submission for further details.)

Discussion

The Chairperson said that the Committee took cognisance of the issues raised in the presentations. He emphasised that there should be a balance of societal interests.

He said that the Committee would engage with the administration section of the Committee to implement the next step in the process, which was public hearings in all the provinces in 2023. The specific areas and venues for the consultations with the communities would be identified. This process would be followed by consolidating oral submissions and community inputs.

The Chairperson thanked the stakeholders for being present.

The meeting was adjourned.