Mineral & petroleum resources minister Gwede Mantashe has laid out an empowerment blueprint for companies looking to explore for gas and oil in SA.
Among others, the blueprint would include a requirement to contribute to poverty reduction and housing for employees of a rights holder.
This comes as SA forges ahead with energy diversification through oil and gas exploration — activities that have been met with legal resistance from environmental groups.
Under the draft regulations published by the department of mineral & petroleum resources in a government notice, empowerment requirements will play a critical role in the adjudication of exploration licences.
Companies will have to provide details on how they will empower the communities they do business in and how they plan to empower black people and black-owned businesses.
These plans are to be detailed in what the department calls “local content plan”.
The plan will require companies to list the recruitment, training and skills transfer scheme for black South Africans.
The regulations, open for public comment, also state the local content plan must include “employment equity statistics and a holder’s plan to achieve black people’s participation, including women, in all levels of management”.
Companies must also outline “measures to address the housing and living conditions of the holder’s employees”.
The local content plan must also detail “infrastructure and poverty eradication projects” the operation implements in line with the integrated development plan of municipalities the operations will be located in.
Applicants for the rights will also be required to declare whether the projects have 20% state participation and whether the entity is controlled by “historically disadvantaged South Africans (HDSAs)” or if HDSAs have a “strategic” partnership of 25% plus one vote in the venture.
The Petroleum Agency SA called on industry players to engage with the draft regulations and submit written comments.
“These draft regulations are instrumental in shaping the framework for the exploration and production of SA’s upstream petroleum resources,” it said.
“Public participation is vital to ensure that the final regulations are comprehensive and reflective of the diverse interests within the sector.”
The expansive local content and the publication of the draft regulations come at a time when SA’s race-based transformation requirements have drawn the attention of US President Donald Trump’s inner circle — contributing to the breakdown of diplomatic relations between Washington and Pretoria.
Elon Musk, part of Trump’s administration, has accused SA of having “racist ownership laws”. Part of his frustration is that his company Starlink has not been able to get a licence to operate in SA. In terms of the country’s regulations, communication companies must be 30% black-owned to operate here.
The publication of the draft regulations of Upstream Petroleum Resources Development Act, comes just weeks after the newly formed SA National Petroleum Company (SANPC) began operations.
The SANPC, which will house the state’s 20% carried interest in petroleum rights, including exploration and production, came into being after the merger of existing state-owned petroleum and gas entities, including the Petroleum Oil and Gas Corporation of SA.
President Cyril Ramaphosa in October assented to the Upstream Petroleum Resources Development Bill, marking the separation of the regulatory oversight of petroleum resources from that of mineral resources, both of which previously fell under the Mineral and Petroleum Resources Development Act.
French energy major TotalEnergies last year withdrew from gas field projects in SA.
The reason given was that Brulpadda and Luiperd could not be “converted into commercial development due to the difficulties encountered in developing and upgrading these gas discoveries on the SA market”.
Environmental groups have stalled many gas and oil exploration projects via court orders, with inadequate public consultation processes often cited as a reason.
The draft regulations lays out an elaborate process companies must follow in consulting communities and other stakeholders. The companies must also show they have the financial muscle to conduct the projects.
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