Bill published on establishment of SA petroleum company

The Department of Mineral Resources and Energy has published a bill on the establishment of a South African National Petroleum Company to ensure the State derives maximum benefits from the country’s petroleum resources.

Mineral Resources and Energy Minister Gwede Mantashe published the South African National Petroleum Company (SANPC) Bill for public comment in the government gazette.

The establishment of the SANPC will result in the amalgamation of many entities that fall under the Department of Mineral Resources and Energy petroleum sector.

Some industry experts said they would adopt a wait-and-see approach until the bill was finalised and others said the idea was a non-starter.

But the DA said this could be the first step towards the country forming an oil exploration company. The functions of the company were to hold exploration and production rights, manage and control the State’s participation and interests.

“The SANPC will be the State’s energy champion and facilitator of energy infrastructure across the energy value chain,” said the department in a statement, adding that petroleum resources belonged to the country and as such there was a need to maximise economic benefit from exploration of petroleum and renewable energy resources.

Speaking on a television news channel this week about the bill, Mantashe said one of the decisions taken by the Cabinet was to “consolidate these plethora of SOEs so that we have functional entities that work very well”.

“We are pulling together PetroSA which was stripped to nothing; we link it to the Strategic Fuel Fund, which is doing fuel trade and strategic fuel deposits and the I-Gas, which is in charge of the pipeline from Mozambique to South Africa, and we are putting them together,” he said, emphasising that key to this change was ensuring optimal functioning of the entities.

However, energy expert Tshepo Kgadima said the idea would probably not yield results.

“They want to build a South Africa oil company by combining three entities that are struggling. If they want to explore (for oil deposits), they will not be able to attract the exploration capital as exploration by its very nature is risky.

“Even if they were to find any oil deposit, they have no marketing and distribution network like garages, so this idea will not go anywhere,” he said.

Mthozami Xiphu, the board chairperson of the SA Oil & Gas Alliance (SAOGA), said SAOGA had noted the objectives of the draft bill, including the proposed powers and functions of the envisaged SANPC, but would only comment after further consultation with its members next week.

DA national spokesperson on energy Kevin Mileham, when asked if this bill gives powers for the establishment of the exploration company, said: “Theoretically, yes. The reality is that this new entity is unlikely to have the skills or resources to do so.”

He said they were concerned about the merger of entities.

“It’s worth noting that these entities have very different mandates (particularly the Strategic Fuel Fund), and merging them into a cohesive unit will be both costly and difficult. There is also the question of how the merger will affect jobs, as they currently run as independent entities with their own boards and HR, finance and other departments.

“It must be pointed out that this bill is not yet before Parliament, and this is early-stage public consultation.

We do not anticipate it being concluded before the elections. The DA will therefore provide a detailed submission once the final draft is tabled before the portfolio committee.”

The bill is out for public comment for 30 days. It can be found on the https://www.energy.gov.za/ website under “Making Headlines”.

The Mercury