State interested in shale gas

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Ngoako Ramatlhodi1 Independent Newspapers. Mineral Resources Minister Ngoako Ramatlhodi. Picture: Timothy Bernard.

Parliament - Mineral Resources Minister Ngoako Ramatlhodi on Tuesday confirmed the state has a keen interest in drilling for shale gas itself, suggesting it could help end the historic injustices of natural resource exploration in South Africa.

“We should ensure that, should at some point the state want to walk into the shale gas arena on its own, it should be possible for the state to do so, side by side with the private sector,” Ramatlhodi said at a briefing prior to his budget vote speech.

“We are looking at that.”

He told Sapa it was therefore critical that the state should not over-extend itself in capital terms in agreements with private sector players, who were eager to tap into shale gas reserves in the Karoo, believed to be among the biggest in the world.

“We should not over-commit ourselves in terms of capacity, money.”

The Mineral Resources and Petroleum Development Amendment Bill, which Ramatlhodi hopes to have returned to Parliament by the president, gives the state 20 percent in new gas and oil exploration and production ventures, with the option to increase that at an agreed price.

Ramatlhodi said shale gas exploration regulations were “drafted and ready”, but declined to give a date when they would be made public.

“Now that we have these draft regulations, can we commit to a specific date?... I would rather put it on as an urgent matter that has to be resolved as quickly as possible.”

In his budget speech, he defined shale gas and off-shore oil and gas exploration as game changers in the country's resource development history.

“If stewarded properly, (it) has the potential to drive the development of our economy for all our people in a manner contrary to a historic injustice inflicted upon our people by the mining industry.”

The industry has said the changes to the mineral resources bill risked having a chilling effect on investors and Ramatlhodi said his motivation for bringing it back to Parliament was precisely to create policy certainty.

The minister, who is given wide discretionary powers by the bill, said he did not want industry to feel that too many key factors were enshrined in regulations instead of the legislation itself, and were therefore readily alterable.

Asked whether, if the bill returned to the legislature, he would hope to increase the state's free carry percentage, he said: “We will be guided by the following: that the state secures its interest, that we enable investors to be able to invest and with the expectation to make reasonable profits out of their investment.

“The figures can then be discussed around those three principles.” - Sapa



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