Oil & Gas

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Although historically a mining country, South Africa is poised to transform into a petroleum jurisdiction. This is due to the relative recent discovery of potentially large-scale onshore unconventional gas reserves and the expectations of substantial near-term offshore crude oil and gas discoveries.

This change presents substantial investment opportunities across the value chain, including in the upstream, for oil and gas investors in South Africa. To foster and enable this investment and the development of the oil and gas industry, South Africa's government has embarked on a series of legislative and regulatory amendments and changes in recent months.

The South African petroleum industry is primarily regulated under the Mineral and Petroleum Resources Development Act, 2002 (the “MPRDA”). Chapter 6 of the MPRDA governs the granting of exploration and production rights, and the issuing of technical co-operation and reconnaissance permits.

The Liquid Fuels Charter subjects all licences for exploration and production in the country's offshore area reserve to a minimum nine per cent buy-in by HDSAs (historically disadvantaged South Africans). This measure aims to ensure a fair distribution of the wealth typically generated by oil and gas exploration.

The recent passing of the Mineral and Petroleum Resources Development Amendment Bill, 2013, amends a number of key provisions of the MPRDA. These recent developments should be seen as an attempt by the South African state to foster the rapidly growing oil and gas industry in South Africa.

“This change presents substantial investment opportunities across the value chain, including in the upstream, for oil and gas investors in South Africa.”

For a comprehensive document outlining the implications of this area of law in South Africa
click here.​​

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