Publications
Partners
Cape Town - Mineral Resources Minister Ngoako Ramatlhodi on Tuesday confirmed the state has a keen interest in drilling for shale gas itself, suggesting it could help to end the historic injustices of natural resource exploration in South Africa.
"We should ensure that, should at some point the state wants to walk into the shale gas arena on its own, it should be possible for the state to do so, side by side with the private sector," Ramatlhodi said ahead of his budget vote speech.
"We are looking at that."
He told Sapa it was, therefore, critical that the state should not over-extend itself in capital terms in agreements with private sector players, who are eager to tap into shale gas reserves in the Karoo believed to be among the biggest in the world.
"We should not overcommit ourselves in terms of capacity, money," he said.
The mineral resources and petroleum development amendment bill, which Ramatlhodi hopes to have returned to parliament by the president, gives the state a 20% stake in new gas and oil exploration and production ventures, with the option to increase that at an agreed price.
Ramatlhodi said shale gas exploration regulations were "drafted and ready", but declined to give a date when they would be made public.
"Now that we have these draft regulations we can commit to a specific date... I would rather put it on as an urgent matter that has to be resolved as quickly as possible."
In his budget speech, he defined shale gas and offshore oil and gas exploration as game changers in the country's resource development history.
"If stewarded properly, (it) has the potential to drive the development of our economy for all our people in a manner contrary to a historic injustice inflicted upon our people by the mining industry."
The industry has said the changes to the mineral resources bill risked having a chilling effect on investors and Ramatlhodi said his motivation for bringing it back to parliament was precisely to create policy certainty.
The minister, who is given wide discretionary powers by the bill, said he did not want industry to feel that too many key factors are enshrined in regulations instead of the legislation itself, and are therefore readily alterable.
It was, therefore, preferable to have the bill sent back to MPs, but failing that he would seek to have a regulatory framework that allayed industry fears.
Asked whether, if the bill returned to the legislature, he would hope to increase the state's free carry percentage, he said: "We will be guided by the following: That the state secures its interest, that we enable investors to be able to invest and with the expectation to make reasonable profits out of their investment.
"The figures can then be discussed around those three principles."
In his speech, Ramatlhodi nodded to concerns stakeholders in mining and upstream petroleum had raised regarding the bill.
He said that was why he set up an inter-ministerial team to hold thorough talks with industry players on either changes to the bill, or if that proved impossible, writing a regulatory framework that would allay unease.
"I am ready for any eventuality. In the event the current bill is assented to in its form, I commit to a rigorous and transparent engagement with stakeholders on draft regulations."
Ramatlhodi signalled that the state was ready to exercise its right to cancel licences if mining houses failed to meet deadlines in the Mining Charter on improving workers' conditions, but added that he did not believe this would prove necessary.
