South Africa’s government has decided in a surprise move that no new onshore or offshore oil and gas permits and rights will be awarded while it gets to work on a future licensing regime.
However, lawyers believe the ban on acreage awards could be the subject of a court appeal.
Mineral Resources Minister Samson Gwede Mantashe gazetted a notice on 28 June that, as of that date, stopped the Petroleum Agency of South Africa (PASA) accepting new applications for any reconnaissance permit, technical co-operation permit (TCP), exploration right (ER) or production right (PR).
Mantashe used section 49(1) of the Mineral & Petroleum Resources Development Act (MPRDA) of 2002 to restrict the granting of new applications, pending publication of a notice of invitation for applications.
The notice itself said that the decision was made “having regard to the national interest and the need to promote sustainable development of the nation’s petroleum resources.”
However, Mantashe’s notice will not affect the processing of applications for the four categories of permits and rights.
After the notice was published, PASA’s acting chief executive Lindiwe Mekwe issued a clarification to the upstream industry.
“It is significant to note that the restriction does not affect the exclusive rights conferred by the MPRDA on holders of existing TCPs and ERs to apply for ERs or PRs, respectively, (or) applications that were lodged prior to the publication notice,” the notice said.
Mekwe added that the minister’s decision “is part of a… strategy that is primarily aimed at using licensing as a tool to achieve the transformation ideal encapsulated in section 2(d) of the MPRDA and (to) fast-track exploration.”
On it website, PASA claimed reconnaissance permits for seismic surveys are unaffected by the moratorium, despite the gazette saying the opposite.
Ntsiki Adonisi-Kgame, director of natural resources and environment at South Africa-based law firm ENSafrica, said the government failed to solicit representations from relevant stakeholders before enacting the moratorium so the minister “acted without the due process required in terms of section 49 of the MPRDA. For this reason alone, (the) moratorium will qualify for review by a court.”
She added that Section 49 only contemplates a prohibition or restriction, where it is in the national interest, of delimited areas of land and specific mineral and/or petroleum resources.
“The provision does not empower the minister to prohibit or restrict applications in respect of South Africa as a whole and in respect of all minerals and/or all petroleum resources,” said Adonisi-Kgame. Nevertheless, she pointed out that until this moratorium is set aside by a court, it remains valid and in effect.
The minister’s decision will not affect an application for an ER in the Orange basin that was submitted to PASA on 19 June by Sezigyn and which was accepted by Mekwe on 28 June.
This application covers a large deep-water ER formerly held by Anglo-Dutch supermajor Shell and which Sezigyn held as a TCP.
Sezigyn is registered to the same address in Johannesburg as Ricocure and Sungu Sungu Petroleum, companies that also hold acreage in the Orange basin.
Likewise, an ER application submitted on 13 June by state-owned PetroSA for Block 1 in the Orange basin appears to be unaffected by the moratorium because it was accepted by Mekwe on 21 June.