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National Assembly Passes Upstream Petroleum Development Bill, but Flaws Remain

2 November 2023 at 1:23 pm

DATE: 2 November 2023

Cape Town, South Africa — The recent passing of the Upstream Petroleum Resources Development Bill (B13B-2021) by the National Assembly marks a significant development in the regulation of petroleum resources. The bill’s primary objective is to separate the oversight of petroleum resources from that of mineral resources, both of which currently fall under the Mineral and Petroleum Resources Development Act (Act No. 28 of 2002). This separation sets the stage for a new regulatory framework dedicated to the upstream petroleum industry.

While the creation of a specific regulatory framework for the upstream petroleum sector is a positive step, it is concerning that the National Assembly has passed the UPRD Bill given several serious shortcomings.

Fossil Fuel Exploitation vs Climate Commitments: It is an express objective of the Bill to accelerate oil and gas exploration and it contains a range of mechanisms to achieve that objective. Given the global warming impacts of oil and gas exploitation, that objective exposes the Bill as being blind to the climate emergency. Crucially, accelerating oil and gas exploitation will have profound implications for South Africa’s greenhouse gas reduction commitments under the Paris Agreement. In the face of the climate emergency and South Africa’s reduction commitments, the Bill is irrational.

Social and Economic Welfare: Mineral and petroleum extraction brings an enormous burden to bear on local communities who find their environment compromised, their access to water and water quality compromised, their air quality compromised, their health compromised, their access to land worsened by resettlement, among other impacts. The MPRDA acknowledges this in recognising  “the need to promote local and rural development and the social upliftment of communities affected by mining,” and by the establishment of a social and labour plan (SLP) framework, the objective of which is to address those egregious impacts. The Bill, on the other hand contains no SLP framework, nor does it contain any other mechanism aimed to address the negative socio-economic impacts on communities who are local to, and arguably most affected by, the extraction of oil and gas that the Bill will regulate. The Bill therefore maintains and further entrenches the poverty that afflicts many communities affected by the extractives industry and is therefore in conflict with the principle of sustainable development along with a range of constitutional rights.

Environmental Alignment: The Bill introduces a new petroleum right that will allow exploration and production under a single license. However, this petroleum right lacks alignment with the National Environmental Management Act (Act No. 107 of 1998) and its regulations, creating a conflict with the One Environmental System established under section 50A of the National Environmental Management Act.

The Centre for Environmental Rights submitted comprehensive comments addressing these and other concerns. Regrettably, these were not addressed in the version of the Bill passed by the National Assembly.

Following approval by the National Assembly, the UPRD Bill must now proceed to the National Council of Provinces (NCOP) for concurrence. The NCOP must either pass the Bill, pass an amended Bill, or reject the Bill. Section 72 of the Constitution enjoins the NCOP to facilitate the involvement of the public in its legislative processes. The NCOP must therefore facilitate public consultation on the UPRD Bill before it passes, amends or rejects the Bill.

Members of the public will have another opportunity to have their say through such consultation and should consider the submission of written inputs. The public should therefore look out for invitations to consult on the Bill.