CAPE TOWN, May 14 (Reuters) - South Africa wants a free 20%
stake in oil and gas exploration and production ventures under a
new upstream petroleum bill, which allows the minister to
reserve petroleum blocks for Black investors, a copy of the bill
seen by Reuters showed on Friday.
The Upstream Petroleum Resources Development Bill, approved
by cabinet earlier this week, is meant to help regulate a
nascent industry in the country following new offshore gas finds
by France's Total that helped unlock a new petroleum
frontier off South Africa's coast.
If the legislation is passed in its current form it could
mean vast sums flow into state coffers.
But it could also put off investors at a time when the world
is turning away from fossil fuels due to climate change, and the
impact of COVID-19 weighs on investment decisions by oil majors.
Introduced by Mineral Resources and Energy Minister Gwede
Mantashe, the bill deals specifically with the oil and gas
industry and not lumped together with the established mining
sector, after a broad pushback from oil companies on the free
carry proposal when it was first mooted almost a decade ago.
"The state has a right to a 20% carried interest in
petroleum rights, including in both the exploration and
productions phase," said the bill seen by Reuters.
The bill defines "carried interest" as state participation
through an interest in a petroleum right, "which interest vests
exclusively for the benefit of the State and the costs of which
are borne by the carrying holder of a petroleum right".
In terms of existing law, South Africa's petroleum resources
belong to the state and it is the custodian.
The bill proposes that a new State Petroleum Company must
enter into a joint operating agreement or become a party to an
existing joint agreement.
"The State Petroleum Company is entitled to full
participation including corresponding percentage of voting
rights as determined by the joint operating agreement."
The bill, which will be publicly debated at parliament, also
allows for competitive licensing rounds and stipulates specific
timeframes for exploration licences and production permits to be
used.
(Reporting by Wendell Roelf; editing by David Evans)
