State keen to have finger in shale gas

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Sapa

Mineral Resources Minister Ngoako Ramatlhodi confirmed yesterday that the state had a keen interest in drilling for shale gas, suggesting it could help end the historic injustices of natural resource exploration in South Africa.

“We should ensure that if, at some point, the state wants 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 prior to his budget vote speech.

He said it was 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 [or] money.”

The Mineral and Petroleum Resources Development Amendment Bill, which Ramatlhodi hopes to have returned to Parliament, gives the state a 20 percent stake 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 offshore 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 bill risked having a chilling effect on investors. But Ramatlhodi said his motivation for bringing it back to Parliament was to create policy certainty.

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


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