CAPE TOWN (miningweekly.com) – Splitting out oil and gas from the proposed amendments of the Minerals and Petroleum Resources Development Act (MPRDA) would be a progressive move by government, Democratic Alliance (DA) shadow minister of mineral resources James Lorimer said, but he criticised government for creating widespread confusion because of divergent views within government ranks regarding the MPRDA.

During a meeting of Parliament’s Mineral Resources Committee on Thursday January 30, chairperson Faith Bikani made the proposal that oil and gas should be treated separately from all other minerals.

“Five of us attended the committee meeting,” Lorimer told Mining Weekly Online on the sidelines of the Investing in African Mining Indaba, in Cape Town, “and four of us thought it was a good idea.”

However, the fifth attendee – a representative of the Department of Mineral Resources (DMR) – opposed the idea.

“This indicates that there seems to be a lack of agreement in the DMR and government on the way forward, which puts us in an unclear position,” Lorimer commented.

However, law firm Webber Wentzel partner Peter Leon noted that the committee would decide on the way forward, not the DMR. What the way forward would be, though, was entirely uncertain at this point, he agreed.

Until shortly before the committee meeting last Thursday, oil and gas companies operating in South Africa, the Chamber of Mines, and government had been in closed talks about the proposed Amendment Bill and its treatment of the oil and gas sector, Mining Weekly Online understands.

These talks may have brought some understanding on government’s side that oil and gas should possibly be treated separately from other minerals in the country, Lorimer said.

“One hears of progress on the MPRDA Amendment Bill and perhaps this suggests some progress,” he said.

However, according to Lorimer, the DMR’s position was that there was no mechanism to change the MPRDA's treatment of oil and gas and this was something that would only be changed at a later stage.

“Splitting out the oil and gas from the MPRDA proposals would be sensible,” Leon told Mining Weekly Online. “It’s been such a mess so far, with the free carry and the general treatment of the sector.”

Indeed, government wanted a 20% free carry in oil and gas operations in South Africa, a move that was muting investor appetite, some said.

Minister of Mineral Resources Susan Shabangu shed no light on this latest proposal within the committee. During her opening address at the Indaba, she told delegates that South Africa’s MPRDA would serve to make the country an even more investor-friendly destination, creating more stability and certainty. She noted that the MPRDA would be enacted during her current term, before the general elections later this year. Shabangu made no mention of proposals regarding the treatment of the oil and gas sector.

Achieving the passing of the Amendment Bill in Parliament before election time left little time for big changes, such as the possibility of splitting oil and gas from the MPRDA.

The committee’s voting on the Bill could only happen after the clause-by-clause review of the proposed amendments. The date for this had now been postponed until after the yearly opening of Parliament, marked by the President’s State of the Nation address on February 13. Lorimer said at the moment the clause-by-clause review was tabled for February 18.

Possibly, the committee could then vote on February 19, after which the Bill had to be presented to Parliament for discussion and voting.

This made for tight timeframes, Lorimer noted, since the committee had been instructed by government to pass the Bill "before Parliament rises". That, he said, should happen around March 1.

“We are sceptical if we look at the state of disarray in the department and the government ranks. We’re not sure they know what they want and what is feasible. Our view remains that this Bill in its totality is a disaster,” Lorimer concluded, referring to the clauses in the Bill under review that would give sweeping discretionary powers to the Minister of Mineral Resources over deciding what minerals were strategic.