Blue Chip Issue 81

OIL & GAS
EXPLORING THE UPSTREAM
The latest draft of the Upstream Petroleum Resources Development Bill has been under scrutiny since its
publication in June 2021. The bill comes as South Africa’s upstream oil and gas industry shows some promise.
The Brulpadda and Luiperd
discoveries of gas and condensate,
the largest hydrocarbon discoveries
made locally to date, have opened
a world-class exploration play. These two
discoveries are for only two drilled prospects
in the Paddavissie feature where three further
prospects remain to be drilled. There could be
sufficient gas to feed the Mossel Bay plant at
full capacity for more than 40 years.
The Paddavissie feature is only a fraction
of the Block 11B/12B, therefore these two
gas finds do not even begin to represent the
full potential of the licence block. Further
seismic data to the east has confirmed the
existence of another geological feature,
named Kloofpadda, which consists of several
large and encouraging leads. There are also
prospects identified in the north of the block.
REVISED REGULATION
Oil and gas exploration and production is
currently regulated under the Mineral and
Petroleum Resources Development Act, 2002
(MPRDA). The Upstream Petroleum Resources
Development Bill (UPRDB) will repeal and
replace the relevant sections pertaining to
upstream petroleum activities in the MPRDA.
The Draft Bill provides greater policy certainty
and a stable environment for investment in
the South African oil and gas sector. The Bill
offers security of tenure by combining the
rights for the exploration, development and
production phase under one permit.
The aims of the UPRDB are to expand
meaningful black participation; promote
local employment and skills development
as well as to create an enabling environment
for the acceleration of exploration and
production of the nation’s petroleum
resources. The Bill’s key features include
mandated state participation of 20%, 10%
participation by black persons, and the
empowerment of the Petroleum Agency of
SA (PASA) to administer the development of
the upstream petroleum industry.
“The upstream oil and gas exploration
industry requires technological capacity
and is extremely high risk in terms of capital
investment and needs long-term investment
before a return is shown. Because of this,
many countries choose to share with private
companies, and South Africa follows this
model,” says Dr Phindile Masangane, CEO of
PASA. “Government has designated PASA
as the custodian of South Africa’s oil and
gas resources. Its role is to attract these
companies to our investment opportunities
and facilitate their entry into and operations
in the upstream industry.
“All investors want to see a return on their
investment and a reward for taking on risk.
PASA’s approach is to facilitate their activities
and guide them through compliance and
regulatory requirements to achieve the
best outcome for both government and the
investing companies. Advocacy plays an
important role and PASA is concentrating on
communicating the role that the upstream
industry can play in reconstruction and
development of our economy to government,”
adds Dr Masangane.
EXPEDITING EXPLORATION
South Africa has a history of political stability,
the new administration is widely regarded
as business friendly, and the new Upstream
Petroleum Resources Development Bill will
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