Mantashe tables bill to create state petroleum group

Gwede Mantashe, the minister of mineral & petroleum resources, this week tabled the South African National Petroleum Company Bill to provide for the establishment of the South African National Petroleum Company (SANPC). This comes six years after the cabinet resolved to establish an entity housing all of the state’s petroleum assets.

As a stopgap measure, the department last year invoked provisions in the Public Management Finance Act and launched the SANPC as a subsidiary of the Central Energy Fund group of companies while parties waited for the legislative process to unfold.

This process took a big leap forward this week with the tabling of the bill in parliament, a process that will end with the president assenting it into law.

“The main purpose of the bill is to provide for the establishment of the company to actively participate in the exploration and production operations in order to ensure security of energy supply, to enter into and execute concession agreements with other governments, including other strategic partners,” the bill reads.

According to the bill, the function of the SANPC — which will house PetroSA, iGas and the Strategic Fuel Fund (SFF) — is to hold exploration and petroleum rights and reconnaissance permits in terms of the Upstream Petroleum Resources Development Act.

The company is also expected to manage and control the state’s participation and interest, including the country’s share of petroleum received in kind or in cash, manage the state’s strategic stocks and commercialise storage facilities.

“All persons who, immediately prior to the commencement of this act, were in the employ of iGas, PetroSA and SFF, are deemed to have been transferred to the service of the company on that date without any interruption in their service, on terms and benefits no less favourable than those enjoyed by them immediately prior to their transfer,” the bill says.

“All assets, rights, liabilities and obligations … pass to the company. The establishment of the company will have financial implications, including costs associated with the transfer of human capital and assets of the merging companies and acquisition of other assets.”

Although the Upstream Petroleum Resources Development Act is not yet in force and awaits commencement on a date to be proclaimed in the Government Gazette, recent regulatory developments suggest that implementation is advancing.

The mineral & petroleum resources department last month, following receipt of industry comments, circulated an updated iteration of the regulations of the Upstream Petroleum Resources Development Act 23 of 2024 for further industry comment.

Lawyers from the corporate law firm Cliffe Dekker Hofmeyer said the 2026 draft regulations reinforce the role of local participation in petroleum developments.

“Before a local content plan is included in an application to progress to the production phase, holders must undertake a public participation process with affected communities and interested and affected parties, the purpose of which is to provide opportunity for these communities to benefit from such developments,” the lawyers said in a note.

“For offshore projects, consultation must extend to coastal communities. Such consultation must commence within 180 days of acceptance of the local content plan. Various elements, such as skills development, employment equity targets, procurement initiatives, and local economic development measures, must be contained in the local content plan.

“The introduction of prescribed local content requirements signals a continued emphasis on ensuring that petroleum developments deliver measurable domestic benefits.”

The department has laid out an empowerment blueprint for companies looking to explore for gas and oil in South Africa.

Companies will have to provide details on how they will empower the communities they do business in and how they plan to empower black people and black-owned businesses. These are to be detailed in what the department calls a “local content plan”.

The plan will require companies to list their recruitment, training and skills transfer schemes for black South Africans.

Applicants for exploration rights will also be required to declare whether their projects have 20% state participation and whether the entity is controlled by “historically disadvantaged South Africans [HDSAs]” or if HDSAs have a “strategic” partnership of 25% plus one vote in the venture.

South Africa has large reserves of unconventional shale gas in the Karoo, according to the International Energy Agency.

In October 2025, Mantashe forged ahead with plans to conduct South Africa’s first large-scale seismic survey in five decades in the south-central Karoo, a process that could lead to fracking activities in the area.

The last time the state went in search of gas in the Karoo Basins was in the 1960s and 1970s, when the then state-owned company Southern Oil Exploration Corporation (Soekor) went a similar route — an exercise it abandoned when it made no significant discoveries.

Business Day