In recent times, South Africa’s hydrocarbon resources has attracted international oil companies. This has led to the acquisition of several offshore exploration interests by Shell, Total and ExxonMobil. South Africa’s proven oil reserves is approximately 15 million barrels. However, oil and gas production in South Africa is relatively insignificant, one of the major reasons for this is that commercial production of oil and gas in the in the country is still very low.
Also, the lack of a proper energy policy document; Minerals and Petroleum Resources Development Act (MPRDA) poses a threat to the country’s oil and gas sector. The regulatory uncertainty has long been a major issue facing explorers in South Africa. In June 2018, the Petroleum Agency South Africa, the state regulator, published a statement signed by mineral resources minister that the granting of new technical cooperation permits, and exploration and production rights would be restricted until the publication of a fresh invitation for applications.
Last year, companies halted programmes identifying legislative uncertainty as one of their reasons for doing so and saying that they are awaiting clarity.
However, the South African government claim is that the restriction was part of a strategy to improve the licensing system to fast-track exploration because developing South Africa’s oil and gas industry remains one of the key initiatives of Government. The aim is to grow South Africa’s ocean economy across different sectors.
Several recent industry developments highlight what appears to be renewed confidence in the oil and gas sector by local and overseas investors alike. This is positioning the country to be more investor friendly.