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    S Africa To Take Upstream Stakes: Press


It is a revision of a previously proposal that was shelved in 2015.

by: Joseph Murphy

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Natural Gas & LNG News, Africa, Political, Tax Legislation, News By Country, South Africa

S Africa To Take Upstream Stakes: Press

South Africa’s department of mineral resources is drafting legislation that would provide the government with a 10% free share in new upstream oil and gas ventures, its parliament heard.

The stake would be for the exploration and the production phase, Bloomberg reported on September 13. It represents a reduction of an earlier proposal shelved in 2015 that would have the state a 20% interest.

Under the department's plans, companies would also be offered different contract terms depending on the location of their projects, and whether they are targeting conventional or unconventional resources. How important projects are to the national interest and national energy security will also be taken into account. 

Furthermore, contracts will include a provision for black investors to obtain a 10% stake in new ventures, and the energy ministry will have the right to ringfence some exploration blocks for companies wholly owned by black investors. Lastly, the department has advised charging energy companies a royalty of between 0.5 and 5.0% of profits, but this tax should be governed in separate legislation drawn up by the national treasury.