Blue Chip Journal Issue 76

ADVERTORIAL
A significant challenge facing the
development of a major gas market in
South Africa is the extreme dominance
of coal as a primary energy source, and
industry’s historic reliance on coalgenerated
electricity.
A lack of extensive gas transport and
reticulation infrastructure goes hand in
hand with this, while other challenges
include uncertainty about volumes of
indigenous gas available to industry;
security of supply; switching and conversion
costs; gas pricing; and negativity around
the ongoing use of fossil fuels. End users
require certainty before committing, while
explorers look for a guaranteed market.
On a more positive note, opportunities
for gas lie in the realisation of South Africa’s
NDP and the Integrated Resource Plan (IRP).
Both call for indigenous hydrocarbons –
conventional and unconventional – and
independent power production to play an
increasing role in the nation’s energy mix.
The national power utility also intends
to replace coal-fired power stations with
gas-fired counterparts, in line with the
vision of the NDP. The advent of gas-fired
power stations will represent a ready,
indigenous market for operators that
make discoveries of gas in South Africa,
ensuring it will be far easier to monetise
smaller discoveries that may otherwise
have remained undeveloped.
As custodian, Petroleum Agency SA
ensures that companies applying for
gas rights are vetted to make sure they
are financially qualified and technically
capable. Applicants also need to have a
good track record in terms of oil and gas
exploration activity, as well as regard for
the environment. This applies to both
local and foreign companies. Oil and gas
exploration requires enormous capital
outlay and can represent a risk to workers,
communities and the environment.
Applicants are therefore required to prove
their capabilities and safety record and
must carry insurance for environmental
rehabilitation.
Social and labour plans
In addition, all planned activities can
only be carried out after completion of
an environmental impact assessment
and under an approved environmental
management plan, after consultation with
the public as well as interested and affected
parties. Explorers are also required to
contribute to skills development through
the agency’s Upstream Training Trust.
Oil and gas exploration in South Africa
is regulated in terms of the Mineral and
Petroleum Resources Development Act
In today’s world, oil and gas remain
the most critical of energy resources.
(MPRDA) of 2002, which stipulates that
applicants for production rights are
required to submit social and labour plans
(SLPs) to assist in transforming the industry,
promoting employment and advancing
social and economic welfare in South
Africa.
Applicants must develop and implement,
where applicable, comprehensive
SLPs that cover human resourcesdevelopment
programmes, community
development, housing and living
conditions, and employment equity.
In addition to the MPRDA, other acts
also regulate the sector – including the
National Environmental Management
Act, the Royalties Act, the Mining Titles
Registration Act and the National Water
Act. These acts and regulations have served
DRIVING THE SECTOR
Driving South Africa’s emerging gas
sector while ensuring a well-regulated
and responsible environment is a key
mandate of Petroleum Agency SA, as
is assisting operators with monetising
smaller discoveries that may otherwise
remain undeveloped, through
advertising these opportunities to
potential partners.
Our Vision
A diverse upstream industry contributing
to energy security through sustainable
growth in exploration and development
of oil and gas.
Our Mission
To promote, facilitate and regulate
exploration and sustainable development
of oil and gas contributing to
energy security in South Africa.
the upstream industry well and are all in
line with international standards.
Minister of Mineral Resources Gwede
Mantashe and President Cyril Ramaphosa
have recently stated that oil and gas
exploration and production activities
should have their own standalone
legislation, separate from that applicable
to hard mineral mining. This legislation is
being drafted and the agency is part of
the team at the Department of Mineral
Resources working on it.
In today’s world, oil and gas remain
the most critical of energy resources, and
Petroleum Agency SA is in full support of
those entering the South African oil and gas
exploration and production industries. The
Agency is fully committed to ensuring that
our government and policy-makers sustain
the sector for the benefit of all involved and
will do everything in its power to advance
the industry.
ABOUT PETROLEUM AGENCY SA
Petroleum Agency SA was established in 1999 by Ministerial
directive and is mandated through the Mineral and Petroleum
Resources Development Act, 2002 (Act No.28 of 2002) together
with the National Environmental Management Act, 1998 (Act
No.107 of 1998). These Acts provide for Petroleum Agency
SA to evaluate and promote oil and gas potential exploration
and production activities in South Africa, to regulate oil and
gas exploration and the production industry and to archive all
geotechnical data produced through oil and gas exploration.
The Agency acts as an advisor to the government on issues
regarding oil and gas exploration and production and carries
out special projects at the request of the Minister.
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