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OIL AND GAS | 5 THINGS TO KNOW ABOUT THE UPSTREAM PETROLEUM RESOURCES DEVELOPMENT BILL

OIL AND GAS | 5 THINGS TO KNOW ABOUT THE UPSTREAM PETROLEUM RESOURCES DEVELOPMENT BILL The South African oil and gas sector requires significant investment for the development and growth of the upstream petroleum industry. In an attempt to accelerate the exploration and production of oil and gas, the Upstream Petroleum Resources Development Bill B13B-2021 (UPRD Bill) was introduced to the National Assembly in July 2021. The National Assembly passed the UPRD Bill in October 2023 and currently, the UPRD Bill is with the National Council of Provinces for concurrence.   Below we outline 5 things you need to know about the UPRD Bill:  Number 1: The State is custodian and acts through the Minister of Mineral Resources and Energy  The State is the custodian of all petroleum resources, and the State acting through the Minister of Mineral Resources and Energy (Minister) may grant, issue, refuse, control, administer and manage any rights or permits provided for the in the UPRD Bill.   Number 2: The UPRD Bill provides for 4 rights/permits:  Petroleum rights are granted to explore for and produce petroleum. Petroleum rights may be granted for either i) onshore or offshore acreage in shallow waters; or ii) acreage designated as frontier and offshore acreage in deep waters. A petroleum right for shallow waters may for the exploration phase be granted for 9 years; and for the production phase, for an initial period of 30 years and may be renewed for an unlimited period of 10 years per term. A petroleum right for deep waters may for the exploration phase be granted for a period of 14 years; and the production phase, for an initial period of 30 years and may be renewed for an unlimited period of 10 years per term.   Drilling permits may be applied for by holders of petroleum rights because a petroleum right holder may not undertake drilling without a drilling permit. The application for a drilling permit must be submitted to the Petroleum Agency and approved within 60 days from the date of lodgement, subject to terms as it may determine.   Holders of petroleum rights may also apply for retention permits within 180 days after electing to develop the discovery. A retention permit may be obtained if i) the economic development of gas can only be accomplished where gas produced as the primary or secondary product is sold commercially; or ii) the development and production of petroleum would be uneconomical because of unfavourable prevailing market or economic conditions. A retention permit suspends the terms and conditions of the petroleum right to which the retention permit relates.   Reconnaissance permits are granted to acquire seismic data by conducting reconnaissance operations. Reconnaissance permit is granted for a period not exceeding 2 years. Notably, the holder of a reconnaissance permit has an exclusive right to market any data acquired under the reconnaissance permit for a maximum period of 10 years, which period must be reckoned from the date of lapsing of the permit.   Number 3: The UPRD Bill provides for licensing rounds:  The Minister may administer competitive licensing for petroleum rights through invitations for applications in respect of blocks specified in […]