Regulatory uncertainty scuppers growth in oil and gas sector

South Africa’s oil and
gas industry will
remain undeveloped
unless regulatory
certainty is introduced –
and that includes finalising
the controversial Mineral
and Petroleum Resources
Development Act (MPRDA).
According to independent
African oil and gas
consultant Dave Wright, the
uncertainties introduced
through the MPRDA
amendment bill remain one
of the reasons why investors
and developers are not
engaging with the South
African landscape with as
much fervour as elsewhere.
“Anyone who invests in
a country wants certainty.
If one looks elsewhere
in Africa where there is
ongoing interest in the oil
and gas sector, one sees that
certainty. Many of these
countries are not necessarily
stable environments, but
there is clarity on what the
rules of the game are and
that those rules are not
going to be changed all of a
sudden,” he said.
In South Africa this was
simply not the case.
“Not only do we have a
complete lack of clarity
around rules, regulations
and policies, there is also
constant change. The oil
and gas industry by its
very nature is not one
that can operate in such
an environment – hence
the lack of interest in our
country.”
He said this was
exacerbated by the current
political tension in the
country. “The political
situation in South Africa
and the changes we have
seen recently in key cabinet
positions are the kind of
things that oil and gas
companies keep a very close
watch on,” said Wright.
“In the oil and gas sector
companies carry enough
risk on the exploration side
of it all that they are not
going to take any other
form of risk. Uncertain
environments are risky and
they will not step in until
there is certainty.”
Wright said unless South
Africa could introduce
the required certainty –
which included addressing
the major concerns
industry has had with the
MPRDA amendment bill,
particularly the state’s free
carry and the dissolution of
the petroleum agency – the
oil and gas sector would not
get the necessary attention
from big international roleplayers.
“We need that attention
because unless we have
these companies coming in
and investing in exploration
activities we are never really
going to know what our oil
and gas potential is,” he said.
In February the Minister
of Mineral Resources,
Mosebenzi Zwane, said
that concerns around the
MPRDA Amendment Bill
had been resolved and that
the process around it would
be finalised by June at the
latest.
It remains uncertain if
industry role-players have
been given a final document
to scrutinise and what
the current status of the
MPRDA amendment bill is.