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Bloomberg
South Africa’s government is drafting a new law that aims at securing it a free stake in all new oil and gas ventures, revising the terms of a proposal shelved four years ago.
Under the legislation, which the Department of Mineral Resources and Energy outlined to lawmakers in Cape Town, the state would secure 10% ownership of energy projects at the exploration phase and the rights to 10% of their production at no cost. The law, which is still being refined, will be submitted to parliament in the final quarter of this year, said Ntokozo Ngcwabe, a deputy director-general in the department.
Oil and gas companies that have secured exploration rights have held back on costly drilling while they await clarity from the government on the commercial terms.
Plans to give the state a 20% free stake in all new ventures and the right to a buy an unspecified additional share were put on hold in 2015, leaving the energy industry in limbo. In 2017, Royal Dutch Shell Plc relinquished a license to search for oil in the Orange Basin off the northwest coast.
The finalising of energy legislation has become more urgent since Total SA announced the first significant deep-water oil find off the coast of South Africa in February. Since the discovery, Shell has bought a stake in exploration blocks in the same area from Anadarko Petroleum Corp.
The Mineral Resources and Energy Department also wants energy companies to be charged royalties on their profits ranging from 0.5% to 5% — a levy it says should be imposed in separate legislation drafted by the National Treasury.
By comparison Ghana stipulates a carried interest of at least 15% and Senegal last year proposed a carried interest of 10% for its state oil company in exploration projects and up to 30% in operational fields.