South Africa eyes free 20% stake in new oil & gas ventures

October 30, 2013 | Government & Regulations

South Africa President, Jacob Zuma

South Africa President, Jacob Zuma

Cape Town (Reuters) – South Africa’s government aims to take a 20 percent stake without payment in new gas and oil exploration and production ventures under proposed legislation, the Department of Mineral Resources said on Tuesday.

If the legislation is passed, large sums of money could flow to state coffers if the country begins exploiting its vast shale gas potential but it could also put off potential investors.

The proposed legislation says the government should get a minimum 20 percent “free carried interest”. “Free carried interest means the interest derived from holding shares of which the holder enjoys all the rights of a shareholder but has no obligation to subscribe or contribute equity capital for the shares,” it says. The law would affect companies such as ExxonMobil and Anadarko who are looking to explore for offshore oil and gas. Shell’s inland fracking activities are also likely to be hit.