South African Energy Minister, Tina Joemat-Pettersson, has announced that the country is currently planning to introduce a new law that will separate parts of its oil and gas rules from the legislation governing the mining industry.

According to her, the plan involves separating the section that have to do with the petroleum value chain from the mineral regulatory framework.

“Exploration and gas concessions will fall under the Upstream Gas Bill, which will be derived from the process of separating out the current Mineral and Petroleum Resources Development Act. The Upstream Bill will take into account all the comments from the Integrated Energy Plan and the Ministerial Advisory Committee, but first, the Mineral and Petroleum Resources Development Act has to be withdrawn. The department has proposed further legislation to revive and strengthen the country’s oil and gas industry, which will either be introduced or concluded in the financial year,” Joemat-Pettersson said.

Companies active in South Africa have been left in oblivion as lawmakers have delayed the Mineral and Petroleum Resources Development Act which grants the country a 20% interest in all new energy ventures and allow it to purchase more interests.

While Exxon Mobil Corp. and Total SA have opposed the law saying it was too vague and will destabilize their businesses, the Chamber of Mines supports the plans to separate oil and gas from the mineral-resources bill, saying the delays discourage investment in the nation.

“These proposals could potentially be very helpful from a regulatory perspective. The real solution is to transfer the regulation of upstream oil and gas to the Department of Energy and the removal from the Department of Mineral Resources. The energy ministry only regulates the downstream, or retail, oil and gas industry and not exploration, which does not make sense,” Peter Leon, a partner at law firm Herbert Smith Freehills, told Bloomberg.

Even though South Africa had proven reserves of 15 million BO at the end of 2013, it has no significant production. Around 70% of the nation’s crude demands are met via imports and stabilized from processed coal and gas.

Anita Fatunji