South Africa: State given 20 percent of future oil ventures

South Africa’s parliament has passed changes to its main petroleum law, giving the state a stake of 20 percent in new gas and oil exploration and production ventures. The bill has also given South Africa’s mines minister wide-ranging discretionary powers to place certain minerals in a ‘value-addition’ category, which means a portion of the extracted resource would have to be processed domestically instead of exported in raw form.

The oil industry has hit back at the legislation, saying that move would discourage investment in South Africa’s oil industry. In addition, the speed in passing the bill ahead of general elections in May has alarmed petroleum operators such as Shell, Total and Exxon Mobil, which are looking to explore in South Africa in the wake of big offshore gas discoveries in neighbouring Mozambique, Reuters reported. It must still be signed into law by President Jacob Zuma before it becomes effective.

The Offshore Petroleum Association of South Africa (OPASA) said in a statement that the changes will have “a chilling effect” on investment in the industry. Among its members are Shell, Anardarko, petrochemical group Sasol and BHP Billiton Petroleum.

Read more at: http://www.reuters.com/article/2014/03/12/safrica-oil-idUSL6N0M93S920140312

Read further analysis at the Financial Times ‘Fears rise that South Africa law could hamper oil sector: http://www.ft.com/cms/s/0/64d0df10-a613-11e3-8a2a-00144feab7de.html#axzz2vpgl6cXO

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