President Jacob Zuma says the finalisation of the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill, which is currently in the Parliamentary process, will assist the country to accelerate offshore oil and gas exploration.
Delivering an update in Pretoria on government’s Operation Phakisa, Zuma says there is still an aspiration, under the Oceans Economy Phakisa, to stimulate the development of 30 offshore exploration wells in ten years.
“If this is achieved, it would mean the creation of up to 130 000 jobs, with an annual contribution to gross domestic product of $2.2-billion, while reducing the dependence on oil and gas imports during the production phase.”
However, uncertainty surrounding the legislative environment is perceived as a major impediment to such investment, with the oil and gas sector having raised major reservations when the MPRDA amendments were first released.
The draft changes stipulate a 20% free-carry for the State in oil and gas projects, but also indicate that, in certain instances, government might take even higher positions.
The industry has also expressed concern about the Ministerial discretion to declare a mineral “strategic” and about a proposal that the Department of Mineral Resources assumes control of the licensing of oil and gas acreages from the Petroleum Agency of South Africa.
At one stage, it is even suggested that the oil and gas aspects of the MPRDA should be separated from the legislation, which is said to be more attuned to South Africa’s mature mining sector.
There has since been significant consultations on the amendments and industry observers are expecting material changes ahead of eventual implementation. However, few are currently expecting separate legislation for oil and gas.
In an address at the Sefako Makgatho Presidential Guest House, Zuma stresses that work is continuing under the offshore oil and gas work stream of Operation Phakisa to explore further opportunities.
“Some projects have already commenced. A total of R9.2-billion is to be spent to develop Saldanha Bay as an oil and gas hub,” the President says, adding that the phased gas pipeline routes have also been defined. “
In addition, environmental authorisation has been approved for the Burgan fuel storage facility in the Port of Cape Town. This is an investment of approximately R660-million and construction will commence by the end of August.”
Updates were also provided for the other Oceans Economy work streams dealing with marine transport and manufacturing, aquaculture, and marine protection services and ocean governance.
A roadmap has been developed for the proclamation of new harbours in the Northern Cape, Eastern Cape and KwaZulu-Natal and a Small Harbours Development Authority will be established to support the rehabilitation, upgrade and development of such facilities.
“We have identified Gansbaai, Saldanha Bay, Struisbaai, Gordons Bay and Lamberts Bay for rehabilitation and development,” he says.
Initiatives are under way to boost South Africa’s aquaculture sector, from a R700-million-a-year industry currently to a R3-billion industry by 2019.