FRAGMENTED legislation and regulation are causing confusion and nervousness for potential gas-sector investors, the National Energy Regulator of SA’s (Nersa’s) manager for gas, Nomfundo Maseti, told a hearing of Parliament’s portfolio committee on energy on Tuesday.
She used the possible future extraction of shale gas in the Karoo as an example.
“The MPRDA (Mineral and Petroleum Resources Development Act) gives investors licences to explore and extract the gas. Once it is extracted, the gas has to enter a system, as it is in molecular format, and then it falls under the Gas Act.
“If it has to be transported by road, then it falls under the regulation of the Department of Transport,” Ms Maseti said.
When the committee decided to alter any of the existing laws governing gas or other energy sources, it should ensure that it looked at the effects those changes might have on other laws, she said.
To promote black economic empowerment in the gas sector in terms of the Gas Act meant Nersa had to be given powers to do so.
“You only have that in the objectives of the Gas Act.
“Now you (Parliament) have to give Nersa powers in terms of the legislation to do that. The only way to do that is to make it (a) licence condition ,” Ms Maseti said.
SA’s energy blueprint, the Integrated Resources Plan (IRP), makes allowance for electricity generated from gas to increase from less than 3% of total generation capacity to 14% over the next 30 years.
But the IRP was drawn up before gas finds off the Mozambique coast, and the possibility of shale gas extraction in the Karoo could contribute a lot more gas for the country’s power generation.
Democratic Alliance MP Lance Greyling said the Department of Energy had not finalised its gas utilisation master plan (Gump).
“The department promised to brief the committee about Gump in March but it seems that the first iteration is still with the Cabinet.” Mr Greyling said the IRP could not be updated to take into account the promise of the gas finds as Gump had not been finalised.
PetroSA group CEO Nosizwe Nokwe-Macamo told the committee that her company would not be building a liquid natural gas plant in Mossel Bay as conditions there were not right.
However, she said the company was exploring other options to locate such a plant.
“We have a problem with feedstock and we have to increase the revenue streams,” she said.
The vice-president for regulatory affairs in gas-to-liquids company Sasol, Wrenelle Stander, said regulatory certainty would lead to a predictable return on investment.
Certainty would also encourage multilateral involvement and public-private partnerships, which underpinned the success of gas-field exploitation. She said the agreement between Sasol and the government had provided the regulatory certainty that was required, and had led to a tripling in the size of the local gas industry over 10 years.
Ms Stander said an anchor customer in the form of Sasol had provided certainty in achieving investment returns on the Mozambique gas project, and the infrastructure investment was slightly ahead of demand.