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Gwede Mantashe Lifts Moratorium On Oil And Gas Exploration

Business day

20 December 2019 – 18:41 Lisa Steyn

It is a small step towards kick-starting SA’s nascent oil and gas sector and welcomed by the industry, with no fracking, however, yet authorised

Minister of mineral resources and energy Gwede Mantashe has lifted a moratorium on gas and oil exploration and production in SA.

As gazetted on Friday, Mantashe lifted the restriction on the granting of exploration and production rights as well as technical co-operation permits in respect of onshore areas in SA. However, no hydraulic fracturing will be authorised until the appropriate legislative and regulatory framework is in place.

Hydraulic fracturing, commonly known as fracking, is a process in which a mixture of water, sand and chemicals is injected into rock at high pressure to release the gas inside. It’s a controversial process, with a number of potential negative environmental effects.

The moratorium and its subsequent lifting does not apply to what is designated as “Excluded Area A”, which encompasses largely what is known as the Karoo Basin, where ambitions to use fracking to extract gas from shale deposits has encountered stiff opposition from lobby groups concerned about its effect on such an ecologically sensitive area. This area is already covered by a number of technical co-operation permits, which allow for desktop studies but no exploration activities.

Friday’s move is another small step towards kick-starting SA’s nascent oil and gas sector and comes after Mantashe relaxed the moratorium on offshore hydrocarbon exploration, allowing for applications already in the system to be processed, in December 2018.

Executive director of the SA Oil and Gas Alliance Niall Kramer welcomed the development as one of the necessary building blocks to make way for an enabling policy framework. Kramer doesn’t, however, see the development signaling any imminent activity.

“This looks like it is potentially a step towards passing the Upstream Petroleum Resources Development Bill — and that is where it really starts becoming of real interest. Then we can see if the terms are commercially attractive and whether industry will view them as stable into the future.”