Imminent changes to South Africa’s upstream oil and gas regulatory framework could impact significantly on shale gas development, should industry be allowed to proceed with exploratory drilling, says corporate law firm Bowman Gilfillan oil and gas department head Lizel Oberholzer.

The mining industry continues to voice its concern over the contentious draft Mineral and Petroleum Resources Development Act (MPRDA) Amendment Bill, which is being reviewed by the Department of Mineral Resources (DMR).

Addressing Gas Week 2013 delegates in Johannesburg last month, Oberholzer provided an overview of the amendments, highlighting those that would affect the oil and gas industry, in particular, including the proposed disbanding of the Petroleum Agency of South Africa (Pasa) as a dedicated independent sector regular.

The draft MPRDA Amendment Bill delegates all functions of this agency to the DMR at regional level, which has practical implications, should the shale gas sector move forward with exploration and development.

Oberholzer explains that exploration and production areas for shale gas development can cover more than one region, with the current applications for shale gas exploration spanning over three provinces. This means that oil and gas companies may have to submit the same application to several regional managers. Further, once a right is granted, companies may have to submit their data, reports and samples for one project to more than one regional manager.

“There will be no single point of entry and compliance requirements will be inconsistent,” says Oberholzer, who believes an independent petroleum regulator is recognised as best practice worldwide and should, therefore, be retained, especially in light of possible natural gas sector development.

She adds, however, that the DMR has indicated to industry that it would consider retaining a specialised unit within the DMR to regulate the sector.

Cabinet approved the draft MPRDA Amendment Bill and published it for public comment on December 27, after which interested parties were required to submit comment by February 8.

“We trust the DMR will take our submission into consideration and hope to have an opportunity to address the portfolio committee on these changes,” says Oberholzer, adding that the draft Amendment Bill is expected to be tabled in parliament in May or June.