INTERVIEW Making
INTERVIEW Making investment in the South African oil and gas sector as attractive as possible Dr Phindile Masangane, CEO of Petroleum Agency SA, outlines PASA’s new strategic objectives as interest in South Africa’s resources grows internationally. What is the thrust of PASA’s new five-year strategy? The Agency has identified five new strategic objectives to enable it to effectively deliver on its mandate by capturing the opportunities presented by the changes in the environment as well as ensure that the Agency overcomes the challenges that it faces. These are: • Increasing exploration activity: to move the industry from a predominately exploration phase to development and production phase • Sustainability: to ensure the company has sufficient financial and human resources to carry out its responsibilities into the foreseeable future • Advocacy: to provide input into policy and regulations • Digital transformation: to adopt new, more efficient technologies • Operational excellence: to ensure efficiency of our process. These five strategic objectives will position the Agency as a strategic entity of government in its goal of diversifying the energy mix and developing the domestic gas market, embracing digitisation and automation to improve efficiency, rising to the requirements of the new legislation and finding a place in the global transition towards a low-carbon future. What is the mandate of PASA in terms of being a “custodian” of the country’s oil and gas rights? PASA’s mandate is threefold. Firstly to attract investment to South Africa’s upstream industry, secondly to regulate the activities of oil and gas explorers and producers, and thirdly to act as the national archive and database for all data and information produced in the process of oil and gas exploration and production. The upstream oil and gas exploration industry requires technological capacity and is extremely high risk in terms of capital investment and needs long-term investment of resources. Many countries share the risk of oil and gas exploration and production with private companies, and South Africa follows this model. Government has designated PASA as the custodian of South Africa’s oil and gas resources. Its role is to attract these companies to our investment opportunities and facilitate their entry into operations in the upstream industry. When will the moratorium on new applications for rights be lifted and PASA be open for new bids? As of December 2020, there is no longer a moratorium on applications for rights onshore, other than those for shale gas in a specified area covering the central Karoo. Other onshore applications continue to be received and processed in terms of the MPRDA. The moratorium for shale-gas rights and new offshore applications remains in place and is expected to be lifted with the enactment of the hydraulic fracturing regulations (for environmental management and water use) for the shale-gas extraction technologies. With a strong international focus on decarbonisation, what is PASA’s position on the continued exploitation of fossil fuels? The transition to cleaner fuels and renewables is inevitable if the world is to reduce the negative impact of climate change. South Africa is a signatory to the Paris Agreement and has committed to a “Peak-Plateau-Decline” carbon emission trajectory. Government policy is to diversify the country’s energy mix which is currently coal-dominated, to a lower-carbon future by introducing proportionately higher renewable energy resources such as wind and solar, into the energy mix as well as gas-to-power. Gas burns with less than half the CO2 emissions than coal and additionally has no SOx emissions. It is thus a suitable transition fuel 32 | www.opportunityonline.co.za
INTERVIEW Is there international interest in South Africa’s oil and gas resources? The exploration map on our website shows that international companies such as Total, Shell, ENI, Kosmos, Africa Energy Corporation, Azinam, Impact Oil and Gas, CNR, Qatar Petroleum, New Age and others all hold interests in exploration acreage. In addition, we have agreements in place with international service providers to acquire seismic data. towards a lower-carbon economy for South Africa especially since gas-to-power technologies are flexible and would therefore complement the intermittent renewable energy being added to the national grid. What is PASA doing to attract investment and promote new drilling projects? PASA continues with its programme of promoting investment opportunities at local and international oil and gas conferences and exhibitions. South Africa has a history of political stability. The new administration is widely regarded as business-friendly and the new UPRD bill will assist the Agency in expediting exploration through close management of acreage allocation and work programmes. The bill also empowers the Agency to commission multi-client or speculative surveys, enabling the acquisition of data to attract investment. South Africa currently offers an attractive fiscal framework. These positive factors create a conducive environment for the Agency to pursue its mandate of attracting investment into the upstream petroleum industry. Does PASA have a strategy to retain existing investors? All investors want to see a return on their investment and a reward for taking on risk. PASA’s approach is to facilitate their activities and guide them through compliance and regulatory requirements to achieve the best outcome for both government and the investing companies. Advocacy plays an important role and PASA is concentrating on communicating the role that the upstream industry can play in reconstruction and development. A recent example was the facilitation of logistics for the drilling of the Luiperd well during Covid-19 lockdown. What are the implications of the passing of the Upstream Petroleum Resources Development Bill (UPRD) by the South African parliament? Oil and gas exploration and production is currently regulated under the Mineral and Petroleum Resources Development Act, 2002 (MPRDA). The UPRD will repeal and replace the relevant sections pertaining to upstream petroleum activities in the MPRDA. The draft bill therefore provides greater policy certainty and a stable environment for investment in the South African oil and gas sector. The bill provides security of tenure by combining the rights for the exploration, development and production phase under one permit. What changes are envisaged in the amendment to the National Environmental Management Act of 1998 (NEMA)? The National Environmental Management Laws Amendment Bill, which was revived in June 2020, proposes various amendments to the National Environmental Management Act, 1998. Proposals that may positively impact upstream petroleum operations include the provisions empowering the minister responsible for mineral resources to delegate to any organ of state and designate as an environmental petroleum inspector any staff member of any other organ of state that executes a regulatory function. The minister may delegate certain competent authority functions to the Petroleum Agency SA, which may improve the turnaround timelines for making decisions on EA applications. Furthermore, designating staff members of the Agency as environmental petroleum inspectors means that all compliance monitoring and enforcement functions prescribed in the act as far as upstream petroleum operations would be efficiently executed. Dr Phindile Masangane, CEO of Petroleum Agency SA
