South Africa\u2019s government is drafting a new law that aims at securing it a free stake in all new oil and gas ventures, revising the terms of a proposal shelved four years ago.<\/p>\n
Under the legislation, which the Department of Mineral Resources and Energy outlined to lawmakers in Cape Town on Friday, the state would secure 10% ownership of energy projects at the exploration phase and the rights to 10% of their production at no cost. The law, which is still being refined, will be submitted to parliament in the final quarter of this year, said Ntokozo Ngcwabe, a deputy director-general in the department.<\/p>\n
Oil and gas companies that have secured exploration rights have held back on costly drilling while they await clarity from the government on the commercial terms.<\/p>\n
Plans to give the state a 20% free stake in all new ventures and the right to a buy an unspecified additional share were put on hold in 2015, leaving the energy industry in limbo. In 2017, Royal Dutch Shell Plc relinquished a license to search for oil in the Orange Basin off the northwest coast.<\/p>\n
The finalising of energy legislation has become more urgent since Total SA announced the first significant deep-water oil find off the coast of South Africa in February. Since the discovery, Shell has bought a stake in exploration blocks in the same area from Anadarko Petroleum.<\/p>\n
Other key aspects of the proposed law:<\/p>\n
The Mineral Resources and Energy Department also wants energy companies to be charged royalties on their profits ranging from 0.5% to 5% \u2014 a levy it says should be imposed in separate legislation drafted by the National Treasury.<\/p>\n
By comparison Ghana stipulates a carried interest of at least 15% and Senegal last year proposed a carried interest of 10% for its state oil company in exploration projects and up to 30% in operational fields.<\/p>\n