New state-owned petroleum company for South Africa – here’s what to expect

Following the passing of the Upstream Petroleum Resources Development (UPRD) Bill by the National Assembly, the Department of Mineral Resources and Energy has published the draft South African National Petroleum Company Bill for public comment.

The URPD Bill is the government’s bid to separate petroleum provision from mineral provision in South Africa, which will create two separate pieces of legislation for those respective industries. The bill is currently with the National Council of Provinces for concurrence.

The bill also makes provision for the establishment of a new state-owned company, which will be responsible for managing the state’s participation at 20% carried interest in all petroleum rights.

This new company, the South African National Petroleum Company (SANPC), is effectively the merger of three other state-owned companies operating under the DMRE – namely, the South African Gas Development Company (iGas), the Strategic Fuel Fund (SFF) and the Petroleum Oil and Gas Corporation of South Africa (PetroSA).

The draft bill makes provisions for this merger, as well as establishing the terms of the board and the transferring of assets from the three SOEs to the new company.

The minister of mineral resources and energy – currently Gwede Mantashe – will be the sole shareholder of the new company.

According to the draft bill, the company’s objective is to be the government’s “energy champion” and facilitator of energy infrastructure across the value chain, specifically related to:

• Management of the state’s exploration and production rights;
• Development of petroleum resources;
• Facilitating and providing petroleum infrastructure;
• Providing middle and downstream petroleum supply;
• Undertaking commercial aspects of upstream petroleum, mid and downstream operations;
• Providing for renewable energy; and
• Providing for the acquisition, generation, manufacture, marketing or distribution of any form of energy.

Notably, the company’s objectives are broad and once again feature an immense level of crossover between current state departments.

This is notable because the draft bill also specifically lists ensuring national energy security and supporting the country’s just energy transition as part of its objectives – something inextricably tied to Eskom and its wider mandate.

To counteract this, the draft bill includes provisions that empower the SANPC to work cooperatively with other departments and conclude agreements that will avoid or minimise the duplication of functions.

In terms of functions, the new state company will primarily focus on the petroleum industry and do things like manage the state’s strategic crude oil stockpile and commercialise facilities.

In effect, it will continue to perform the functions of the three state companies that will be absorbed into it.

The draft bill can be read below:

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