Oil and gas: Let the people decide
The discovery of oil and gas off the coast of Namibia, South Africa and Mozambique is good news for the Southern African region. However, pragmatism is needed to prevent environmental degradation and adverse socio-economic impacts.
By Minnette Le Roux
The recent offshore oil discoveries by Shell and TotalEnergies in Namibia are significant events that could reshape Southern Africa’s growth trajectory. Moreover, the massive gas projects in the Rovuma Basin of Mozambique, and the oil and gas discoveries off the south coast of South Africa, could change the energy landscape of the region forever.
The downside is that the economic benefits of such large projects only trickle through to local communities after at least three to five years. In the meantime, these companies will have to manage community expectations, skills development, compliance and Environmental and Social Governance (ESG).
While there are limited opportunities for local communities during the discovery phase of a project, more employment opportunities are created when the projects are in the construction and operational phases, including training and education. Unfortunately, oil and gas developments require mostly skilled and specialised labour, which is in short supply in rural communities. Companies are therefore encouraged to invest significantly in skills development and training.
There are several additional risks that a company needs to mitigate when it decides to explore for and/or develop oil and gas deposits. For example, the proposed activities should be compatible with the conservation and ecotourism uses of the area and should not conflict with the local communities’ dependence on the local ecosystem services.
In addition, demand for oil and gas should continuously be assessed as a decline in demand will have an adverse effect on the economic benefit which a community would otherwise enjoy. Another risk would be the climate related risk associated with the oil and gas industries, as countries are moving away from fossil fuels to meet their carbon emission reduction targets.
Legislation dealing with oil and gas
The main legislation relating to the oil and gas industries in Mozambique, Namibia and South Africa are as follows:
Constitution of the Republic of Mozambique;
Law no. 21/2014, August 18 (Petroleum Law);
Decree no. 34/2015, December 31 (Petroleum Law Regulation), amended by Decree no. 48/2018 of August 6;
Ministerial Diploma no. 272/2009, December 30 (Licensing of Facilities and Petroleum Operations Regulation);
Decree no. 56/2010, November 22 (Environmental Regulation of Petroleum Operations);
Law no. 27/2014, September 23 (Petroleum Tax Law);
Decree no. 32/2015, December 31 (Specific Regime of Taxation and Tax Benefits of the Petroleum Operations);
Decree no. 63/2011, December 7 (Employment of Foreign Citizens in the Oil and Mining Sectors);
Council of Ministers Resolution no. 27/2009, June 8 (Strategy for Concession of Areas for Petroleum Operations);
Decree no. 31/2012, August 8 (Regulation on Resettlement Process Resulting from Economic Activities);
Law no. 15/2011, August 10 (Public-Private Partnerships, Large Projects and Business Concessions, also known as the “Mega-Projects” Law);
Decree no. 16/2012, June 4 (Regulation of the MegaProjects Law).
The Constitution of the Republic of Namibia (1990)
Environmental Assessment Policy for Sustainable Development and Environmental Conservation, 1995
Environmental Management Act, 2007
EIA Regulations 2012
Petroleum (Exploration and Production) Act, 1991
Petroleum (Exploration and Production) Act Regulations (1999)
Minerals Policy of Namibia (2004)
Constitution of South Africa, 1996
Mineral and Petroleum Resources Development Act, 2002
Mining Titles Registration Act, 1967.
The National Environmental Management Act 1998
The Income Tax Act 1962
The Value Added Tax Act, 1991
The Mineral and Petroleum Resources Royalty Act, 2008.
It is evident that the regulatory framework for the oil and gas industries in countries like Namibia, South Africa and Mozambique is mainly focussed on the gas and oil resource and not so much the environment and communities.
Limiting the social and environmental impacts in Namibia
The potential environmental and social impacts of developing the offshore discoveries in Namibia could be severe if regulations fail to promote sustainability and address environmental concerns.
Namibia should learn from the success and failures of countries like Angola and Nigeria, who discovered offshore resources many years ago. The authorisation of these projects by the authorities should consider the cumulative impacts these activities would have and if it would be a desired outcome for the area.
Namibia is an extremely sensitive environment. The Namib desert is not only the oldest desert in the world, but it is home to a range of endemic and protected plant and animal species. At the same time poverty and unemployment continue rising at an alarming rate.
The question is whether the country’s environmental laws have enough teeth to ensure that development takes place without environmental or social degradation.
Although Namibia has good environmental laws in place, there are no integrated regulations governing the protection of the environment and social components in respect of mining. This is a major concern as there should be some Integrated Environmental Management objectives set for a country to ensure that development would not have an adverse impact and lead to irreplaceable loss of the environment, indirectly affecting the communities.
Namibia should ensure that the Integrated Environmental Management objectives are met and that the cumulative impact of these activities be considered during the assessment and decision- making process. Furthermore, it should be determined if the activities would be a desired outcome for the area, and if it is in line with the existing uses (conservation and ecotourism) and not in conflict with the local communities’ dependence on the local ecosystem services.
Oil and gas projects encounter opposition in South Africa
In contrast to Namibia and Mozambique, where the oil and gas projects seems to have been received with limited opposition from local communities and environmental groups, proposed seismic surveys by Shell on the east coast of South Africa was put on ice when the multinational faced fierce criticism by civil society.
One of the main reasons is that in South Africa, extensive public participation needs to be undertaken. If there are any concerns or the procedures as set out in the legislation is not adequately met, the project could be rejected by the competent authority.
Furthermore, South Africa has above and beyond the legislative requirements, many strategic environmental tools in place that needs to be abide to, such as the 2018 National Biodiversity assessment identifying sensitive areas where no prospecting or mining activities should take place.
With most African economies limping in the wake of Covid-19, African governments are faced with the conundrum of accelerating exploration and development at the expense of the environment and communities or implementing stringing measures to keep the environmental and social integrity intact.
African countries should integrate the best elements of oil and gas projects and reject those that compromises the country’s values. It is essential that local communities and civil society organisations are given a right to participate in the environmental decision process.
At the very least, the projects should be sustainable and ensure long-term growth. The regulatory and fiscal regime of a country should inform the decision on whether an international oil and gas company could do exploration work. It would be important for a country to focus on the technical element, safety and environmental performance of such projects and determine if it will be a desired outcome long before the final decision is made.
Oil and gas: Let the people decide
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