Upstream Petroleum Resources Development Bill: Negotiating Mandate

Meeting report

Upstream Petroleum Resources Development Bill [B13-2021]: Negotiating mandates

Eastern Cape

The Committee designated by the Eastern Cape Legislature supports the Bill. It mandates that the Eastern Cape permanent delegate to the National Council of Provinces (NCOP) vote in favour of the Bill.

Free State

The Portfolio Committee on Agriculture and Rural Economic Development, as designated by the Free State Legislature, votes in favour of the Bill.

Gauteng

The Committee on Economic Development supports the Bill with the proposed amendments as indicated.

The Committee Secretary noted that the Gauteng Legislature had a proposed amendment that Members must vote on. The amendment was read as follows:

The Bill needs to have clear transitional provisions. The provision of a transition period to move from one regulatory regime to another is common practice in the law. This was the case when the Mineral and Petroleum Resources Development Act (MPRDA) was promulgated in 2004, during which holders were given three years to transition from the regulatory regime which previously prevailed. Similar provisions would remove uncertainty.

Ms Sibongile Malie, a member of the drafting team from the Department of Mineral Resources and Development (DMRE), said that on page 45 of the draft Bill, there was a whole section, Schedule One, that proposed transitional arrangements which sought to give effect to the proposed amendment by the Gauteng Legislature. There was a chapter that talked about what would happen when there were pending applications, the continuation of permissions and social and labour plans, and existing to new permits. Thus, it was the team’s view that the Bill already had provisions that addressed the proposed amendment. 

Mr Sisa Makabeni, Office of the State Law Advisor, agreed with the Department, and had no additions.

Provinces voted on Gauteng's amendment. Gauteng was the only supporting province.

KwaZulu-Natal

The Portfolio Committee on Conservation and Environmental Affairs agreed to mandate the KwaZulu-Natal (KZN) delegation to support the Bill with the following proposed amendment:

Under the Objects of the Act, add a reference to South Africa’s international climate change commitments to reduce greenhouse gas emissions as follows:

“2(j) that the petroleum industry sector will comply with its sectoral emissions targets to reduce greenhouse gas emissions as required in terms of applicable law and South Africa’s international commitments.”

Also, consider adding under the functions of the Petroleum Agency, in Clause 10(n), as follows:

“10(n) consider and enforce sectoral emissions targets to reduce greenhouse gas emissions per applicable legislation.”

Ms Malie said that clause 2(i) gives effect to Section 24 of the Constitution by ensuring that the nation’s petroleum resources are developed in an orderly and ecological manner while promoting justifiable social and economic development. Thus, laws regulating greenhouse gas emissions and environmental issues were provided for under the National Environmental Management Act (NEMA). The Department must implement all the provisions provided for in the NEMA, so the provisions already covered in the NEMA address the amendments proposed by KZN.

In 2008, the Ministers entered into one environmental management system, where the Department of Environmental Affairs (DEA) develops legislation on what must be done, and the DMRE is the implementing authority. Repeating those provisions was unnecessary, and the legislations work hand in hand.

Mr Makabeni also agreed with the Department.

Members were invited to vote on the 2(j) proposed amendment. Gauteng and Mpumalanga abstained, with two not present, while the remainder did not support the amendment.

Members also voted on the proposed clause 10(n). Three did not support it, two abstained and one supported, while the rest were not recorded. The proposed amendment was not adopted.

The KZN legislature further submitted the following comments:

Interested and affected parties are called upon to submit their comments in writing within 30 days to the Petroleum Agency. In Clause 19(2), the Petroleum Agency has a discretion as to whether to conduct public hearings, and the decision to do so is based on the applicants’ consultation report. In our view, the Petroleum Agency must conduct public hearings with affected local communities rather than decide to do so based on the applicant’s report (which has the potential to reflect bias). This will also be an opportunity for the Petroleum Agency to hear from those who may be illiterate and most vulnerable, to ensure that the affected community’s views are considered and objections noted.

The submission was also encompassed with a comment.

Ms Stella Mamogale, Director: Mining and Mineral Policy, Department of Mineral Resources and Energy (DMRE), said the Bill was clear on consultations. There are those done by agencies and those done by the applicants. The comment suggests why the Agency conducts its consultations after the applicants. As outlined in clause 19(1), consultations are conducted with affected and interested parties 14 days from the date of acceptance of the applications. Clause 20 also allows the applicants to conduct their consultations. The consultations are two-fold.

During petroleum exploration and production, operators and licence holders must ensure local communities benefit from development in terms of supply and economic growth. The Bill enhances this requirement.

Mr Makabeni agreed with the Department. The primary responsibility for consultations rests with the applicant when they apply. The role of the Agency to consult depends on the report the applicant would have submitted. The Agency is informed by the report if there is anything amiss. It is not in every case that there will be a need for the Agency to consult, hence the clause is worded that way.

In addition, the Bill forces the Agency to attend the consultation process by the applicant. Even though the first consultation will be conducted by the applicant, the Agency must attend all the time during the consultation processes. Thus, it will be in a position to comment on the process, and it is unlikely that the application will be biased, because the Agency will be present during the consultation.

The Chairperson invited Members to vote on the proposed amendment.

Three provinces did not support it, three abstained, and two were absent. The amendment was not passed.

Limpopo

The Limpopo Legislature mandated the permanent delegate of the NCOP to negotiate in favour of the Bill, considering the inputs and comments of the public contained in the report. However, the report did not contain any substantive issues.

The Chairperson said that if the comments did not have any proposed amendments, they would not be read or considered, but could still be sent out to Members. If the comments contained amendments, the Committee would be compelled to read them and consider them.

Mpumalanga

The Mpumalanga Legislature conferred on the permanent delegate representing Mpumalanga a mandate to negotiate in favour of the Bill.

Northern Cape

The Legislature Committee voted in favour of the Bill.

The Committee Secretary noted that the top of the mandate states "in favour of the proposed amendments." He had gone through the report, and it did not contain any proposed amendments, but they had forgotten to remove the wording. He had contacted the legislature, and they had confirmed that there were no proposed amendments included, but there were comments.

The Chairperson said that they would not go through the comments. They would do so if there was an amendment.

North West

The Legislature voted in favour of the Bill, with proposed amendments.

The Committee Secretary read the proposed amendments as follows: 

1. The Bill is silent on establishing shafts. However, it is recommended that there be a provision that regulates the operation of shafts in mining petroleum. 
2. Clause 90 provides for the optimal production of petroleum resources. Further, it provides that the Petroleum Agency may subject the direct holder of a petroleum right to take corrective measures if petroleum is not being produced optimally under the production work programme. It is therefore proposed that before clause 90(2) is imposed, the Minister must determine if there are gaps that contribute to a lack of production and if there is a need for beneficiaries to be capacitated with necessary resources.
3. The Bill needs to make a provision for the cartels of filling stations that are trading low-quality fuel to consumers, and relevant penalties in that regard must be effected.

Ms Malie replied that when the Department presented to the NCOP, it was made clear that the Bill was dedicated to the exploration and production of oil and gas. It had nothing to do with the mines.

In response to the third point, this was something that had been encountered by the Department during stakeholder consultations. There seemed to be confusion between petroleum and petroleum products like liquid fuels. There was a specific Act that dealt with liquid petroleum -- the Petroleum Product Act -- but this Bill was regulating the production and exploration of crude oil and gas. Crude oil was subjected to refineries that produced the final products, like petrol, diesel, paraffin, etc.

Mr M Makabeni agreed with the Department’s response.

Ms Mamogale responded to the second point in clause 90, but her connectivity was intermittent.

The Chairperson invited Members to vote on the proposed amendments. On proposed amendment one, three provinces did not support, five abstained, with one not present. The amendment was not supported.

On proposed amendment number two, two provinces did not support, with five abstaining and one supporting and absent. The amendment was not supported.

On proposed amendment number three, there were three that did not support, four abstained, one supported and one was absent.

Western Cape

The Western Cape Legislature did not support the Bill, and recommended that it be redrafted in its entirety.

The Chairperson thanked the Department for its participation in the meeting and the clarifications that it provided when questions arose. She also expressed gratitude to the office of the State Law Advisor for its contribution.

Consideration and adoption of minutes

The draft minutes of the meeting of 12 March were submitted for consideration, and adopted without any changes.

The meeting was adjourned.