By Wendell Roelf
CAPE TOWN, March 12 South Africa's parliament
passed changes to its main petroleum law on Wednesday, giving
the state a stake of 20 percent in new gas and oil exploration
and production ventures, a move industry said would discourage
The bill also gave the mines minister wide-ranging
discretionary powers to place certain minerals in a
"value-addition" category, which means a portion of the
extracted resource would have to be processed domestically
instead of exported in raw form.
The speed in passing the bill ahead of general elections in
May has alarmed petroleum operators such as Shell,
Total and Exxon Mobil, which are looking to
explore in South Africa in the wake of big offshore gas
discoveries in neighbouring Mozambique.
It must still be signed into law by President Jacob Zuma
before it becomes effective.
"There have been significant changes in recent days, which
we have not been afforded an opportunity to comment on and which
we are certain will have a chilling effect on investment in
a high-risk and capital-intensive industry such as ours," the
Offshore Petroleum Association of South Africa (OPASA) said in a
statement ahead of the bill's passage in parliament.
Among its members are Shell, Anardarko,
petrochemical group Sasol and BHP Billiton Petroleum.
According to the Petroleum Agency of South Africa, the
country has attracted the greatest interest in exploration so
far in its history, with both onshore and offshore acreage
Shell has been exploring for shale gas in the onshore Karoo
area, while Total said in November it expected to drill its
first offshore well in the Outeniqua Basin, about 175 km (110
miles) off the southern coast of South Africa.
Australian junior explorer Sunbird Energy has been
developing South Africa's largest stranded gas field, Ibhubesi
on the west coast, which had estimated reserves of 540 billion
cubic feet of gas.
In addition to the envisaged 20 percent "free carried
interest", the government introduced a new clause entitling it
to further participation in the form of an acquisition at an
agreed price or production-sharing agreements.
"This bill also gives government the power to nationalise at
fire sale prices any drilling operation that finds oil or gas,"
James Lorimer, the opposition Democratic Alliance's shadow
minister of mineral resources, said during robust debate.
"Drilling companies can be forced, after they have given
away 20 percent free carried interest, to give away the other 80
percent of the find at any low price the government is prepared
to pay," Lorimer said.
In mining, the aim of the bill is to create jobs in a
country with an unemployment rate of around 25 percent and to
add value to its abundant natural resources, which include close
to 80 percent of the world's known platinum reserves.
Producers of designated minerals would have to offer a
portion of their production to local processors in prescribed
quantities, qualities and timelines at an agreed price.
"We are here to table this bill as one of the most
progressive steps in improving and contributing to our economic
development," Mineral Resources Minister Susan Shabangu told
The Mineral and Petroleum Resources Development Amendment
Bill was passed by 226 to 66 votes in the African National
Congress-dominated national assembly.