Businessweek: South Africa Reviews Oil Law as Sub-$50 Crude Deters Drilling

South Africa may be too late rethinking planned changes to energy laws that oil companies say will prevent investment as crude below $50 a barrel deters drilling.

The 2002 Mineral and Petroleum Resources Development Amendment Bill, passed by lawmakers last year, proposed giving the state the right to a free 20 percent stake in all new oil and natural gas ventures and to buy an unspecified additional share at an “agreed price.” Companies including Total SA opposed the provisions, saying they were too vague and would undermine business. President Jacob Zuma declined to assent to the law on the grounds that it may violate the constitution and referred it back to Parliament on Jan. 16.

“The current low prices will certainly limit the appetite for risky and high-cost developments,” Chris Bredenhann, southern Africa energy leader for PricewaterhouseCoopers LLP, said in an e-mailed comments on Jan. 20. “It is therefore critical that any additional barriers, such as uncertain or unfavorable regulatory frameworks are removed. The government has taken note of the negative impact that the proposed MPRDA would have on the industry.” MORE