South Africa is regarded as having significant potential as a bankable oil and gas investment destination, with leading hydrocarbon majors and independents, including oil giants Exxon Mobil, Shell, Eni, Total, Anadarko and Chevron, already in the country,” says Standard Bank’s Oil & Gas Southern Africa director, Paul Eardley-Taylor.

However, he cautions that hope for increased investment could be undermined by government’s continued inability to pass the Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill, as international companies may be discouraged from investing in an environment characterised by policy uncertainty.

“In its current form, [the MPRDA Amendment Bill] is widely regarded by industry as noninvestable, which affects offshore and shale exploration appetite.”

Eardley-Taylor adds that the finalised MPRDA Amendment Bill needs to deal decisively with issues such as the proposition that the State be awarded free carried interest in petroleum rights, issues regarding empowerment shareholding, the State’s ability to buy additional stakes in the industry and beneficiation.

“We hope that these issues will be addressed this year through a more detailed analysis of what frontier jurisdictions typically offer investors. Secondary challenges include the need to finally issue the industry regulations for shale gas.”

Eardley-Taylor tells Engineering News that a theme currently dominating the gas industry is the oil price, which dropped significantly from $106/bl to $55/bl in 2014. “[This] was a major global economic development, which affected the appetite for investments in oil and associated industries such as infrastructure development,” he says.

Eardley-Taylor adds that the continued increase in the production of unconventional commodities, such as shale gas and tight oil, in the US, is also important.

Regionally, Mozambique continues to develop its liquefied natural gas scheme, the Mozambique Liquified Natural Gas (LNG) Project, which Standard Bank was involved in last year through preparation of a macroeconomic study on behalf of Anadarko. The project plans to reach a final investment decision in late 2015.

The Mozambique LNG Project is built on an estimated 50-trillion to 70-trillion cubic feet (tcf) of recoverable natural gas discovered to date in the country’s Offshore Area 1, with Area 4 holding significant additional reserves. In cooperation with government, the private-sector partners are working to advance an initial two-train liquefied natural gas development, with significant expansions expected in future.

Meanwhile, in South Africa, the industry was last year dominated by government’s decision to defer the MPRDA signing, says Eardley-Taylor.