In April this year, the Financial Provisioning Regulations, 2015 were amended to extend the transitional time period within which holders of offshore oil or gas exploration or production rights are required to comply with these Regulations to 19 February 2024. On Friday last week, the Minister of Environmental Affairs amended the Financial Provisioning Regulations, 2015 again, this time to extend the transitional period that is applicable to all other holders of a right or permit to 19 February 2020 (FP Amendment). This extended time period is applicable to holders who applied for their right or permit prior to 20 November 2015 (when the Financial Provisioning Regulations, 2015 were published). When the right was granted is not relevant for purposes of the extension, only the application date.
The purpose of the FP Amendment appears to be to formalise the extended compliance timeframe for these holders under the existing financial provisioning laws. This extension will provide much needed relief to holders who have been racing against time to comply with the Financial Provisioning Regulations, 2015 by 19 February 2019. The FP Amendment also gives the Department of Environmental Affairs more time to finalise the replacement financial provisioning regulations. In the coming months, we expect to see new draft financial provisioning regulations published for comment. These new draft regulations will replace the draft 'Proposed Regulations Pertaining to the Financial Provision for Prospecting, Exploration, Mining or Production Operations' which was published for comment in November last year, and will ultimately repeal the Financial Provisioning Regulations, 2015, when promulgated in final form.
The second part of the FP Amendment provides that holders will, until 19 February 2020, be regarded as having complied with the provisions of the Financial Provisioning Regulations, 2015 provided that these holders have complied with the financial provisioning obligations imposed in respect of the right issued in terms of the Mineral and Petroleum Resources Development Act, 28 of 2002. The purpose of this amendment appears to be to confirm the position that these particular holders must continue to comply with the financial provisioning obligations that were imposed as part of their relevant rights until 19 February 2020, by which date these holders will need to comply with the Financial Provisioning Regulations, 2015.
We will keep you updated on any further developments in this important and rapidly changing space!
