Page 13 - AfrOil Week 20 2021

AfrOil POLICY AfrOil

Draft law reserves 20% stake in upstream

contracts for South African government

SOUTH AFRICA SOUTH Africa’s cabinet has given its approval projects by entering into a joint operating agree-
to draft legislation that calls for reserving a 20% ment (JOA) or becoming a party to an existing
stake in every new upstream oil and gas project JOA
for the state. Once the company takes this step, the draft
The legislation in question is the Upstream law said, it will be “entitled to full participation,
Petroleum Resources Development Bill, accord- including [a] corresponding percentage of vot-
ing to a Reuters report. The draft law, which was ing rights as determined by the joint operating
designed to establish a new legal regime for the agreement.”
upstream hydrocarbon sector, is due to be sub- This is not the first time South African
mitted to Parliament for debate soon. authorities have proposed reserving a stake in
Reuters stated that it had seen a copy of the new oil and gas initiatives for a state-owned
bill and cited it as saying that the South African firm. They mooted a similar plan, known as the
government would have “a right to a 20% carried “free-carry” proposal, about 10 years ago, but
interest in petroleum rights, including in both it drew widespread criticism from oil and gas
the exploration and productions phase.” It also operators.
cited the bill as defining a “carried interest” as The Upstream Petroleum Resources Devel-
state participation through an equity stake in opment Bill also seeks to protect the interests of
a petroleum right, “which interest vests exclu- the state, which acts as the custodian of South
sively for the benefit of the state and the costs Africa’s natural resources, in other ways. For
of which are borne by the carrying holder of a example, it calls for new licence areas to be auc-
petroleum right.” tioned off in competitive bidding rounds and
The bill went on to say that in practice, the obligates investors to execute their exploration
bill would provide for South Africa’s new state licences and production permits within a spe-
petroleum company to secure its stake in new cific amount of time. ™

PROJECTS & COMPANIES
NLNG contractors set to accelerate

work on Train 7 project by end of May

NIGERIA SIMBI Wabote, the executive director of the
Nigeria Content Development and Monitoring
Board (NCDMB), has said he expects the Nige-
ria LNG (NLNG) consortium to accelerate work
on the Train 7 project within the next few weeks.
Speaking to reporters in Lagos earlier this
week, Wabote acknowledged that NLNG had
not been able to move ahead as quickly as it had
hoped. The consortium signed contracts for
the Train 7 project early in 2020 and could not
implement them immediately because of the
coronavirus (COVID-19) pandemic, he noted. Artist’s rendition of NLNG’s Train 7 (Image: KBR)
As a result, he said, Nigerian fabrication
yards, along with other local contractors and “It has been slow, to be fair, in coming to full
sub-contractors that are slated to contribute to steam to keep the various yards in the country
the project, have not yet started operating at full busy,” he was quoted as saying by This Day. “But
capacity. But the pace of work is set to pick up in I have been told that by [the end of] May, things
the near future, he stated. will begin to accelerate.”.

Week 20 19•May•2021 www. NEWSBASE .com P13