GLOBAL LEGAL INSIGHTS – ENERGY 5TH EDITION 2017 SOUTH AFRICA CHAPTER

By Luke Havemann,David Forfar,Aaron Ohm Thursday, October 13, 2016
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The South African energy sector is reasonably diverse, with coal being the protagonist and significantly smaller roles being played by an aging nuclear power plant and a nascent renewable energy sector.  Although the State has made no secret of its fluctuating ambition to invest more than it can afford into new nuclear projects, it has, for more than a century, maintained a consistent interest in pursuing the possibility of commercially viable domestic oil and gas resources.  Despite such interest, which was heightened by the two world wars, the oil crises of the 1970s, Apartheid-related sanctions and, more recently, by the possibility of South Africa being home to some of the largest reserves of conventional and unconventional resources in Africa, a potentially vibrant South African oil and gas industry has yet to flourish.

It is against this backdrop that the upstream oil and gas endeavours are currently the most intriguing aspect of the South African energy sector, hence they form the focus of this chapter.  What follows is an overview of South Africa’s upstream oil and gas industry, a synopsis of the primary statute governing its activities, an analysis of the uniquely South African issue of black economic empowerment and its interaction (or lack thereof) with the upstream oil and gas industry, as well as a discussion of the manner in which development of the industry has been curtailed by ongoing legislative and regulatory uncertainty.  In conclusion, it is suggested that sober steps will need to be taken by the State to steer the oil and gas industry away from the uncertainty that has come to define the legislative and regulatory frameworks that govern the country’s upstream oil and gas sector.

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