PHINDILE MASANGANE: Local communities are guaranteed to be heard in licensing of oil and gas activities

SA has vast oil and gas potential, which can restore energy security, catalyse economic growth and create and sustain a significant number of jobs.

The Petroleum Agency SA (Pasa) estimates that there are about 9-billion barrels of oil and about 60-trillion cubic feet (Tcf) of gas offshore of the country. A mere 6Tcf of gas could generate the 6GW of baseload power Eskom says is required to restore the security of electricity supply to SA. If such gas were to be supplied from our indigenous resources, it would not be linked to community price fluctuations.

The exploration and exploitation of our oil and gas resources are part of Operation Phakisa, launched in 2014 to streamline SA’s National Development Plan for poverty alleviation and social equity. Operation Phakisa sought to unlock selected industries that could contribute up to R177bn to our GDP by 2033 and to create between 800,000 and 1-million direct jobs.

Requirement for consultation with local communities

Legislation requires that interested and affected parties, especially local communities in which upstream oil and gas projects are to be located, be meaningfully consulted as part of the projects’ licensing processes. Such consultation is stipulated in the Mineral & Petroleum Resources Development Act and the National Environmental Management Laws Amendment Act.

Recently, some communities have voiced their concerns that the consultations are not adequate. Pasa has identified three root causes of these concerns. They relate to: (i) the language used to inform the communities upfront about the projects to enable them to participate in the consultation process; (ii) the accessibility of the project information – that is, whether the project information is distilled to a level at which everyone can fully understand the risks and opportunities involved; and (iii) the form of the consultation, whether physical meetings, online meetings or electronic exchange of information by e-mail.  

Pasa’s role in public participation

Pasa is the regulatory authority for the upstream oil and gas industry and has the responsibility to ensure, from a regulatory perspective, that the public participation process for any petroleum permit application evaluation process is conducted meaningfully.

The requirement for public participation is not just for the oil and gas industry. Roads Agency Sanral’s N2 Wild Coast Road Project in the Eastern Cape is a good example. From the time the environmental impact assessment for this project began in 2005 until 2018 legal disputes continued to arise. Sanral conducted an extensive public participation process; a large number of public engagement meetings were held. The transport of people from rural communities to centres for public meetings was facilitated.

Yet only in 2019 did the Gauteng High Court in Pretoria affirm Sanral’s decision to proceed with the construction of the project. The court denied an appeal against an earlier judgment in which Judge Cynthia Pretorius found in Sanral’s favour and confirmed the validity of the public participation processes during the environmental impact assessment.

The processes included public meetings, imbizos and social media communication. The court recognised that the public participation process exceeded the legal requirements. It also recognised that the decision to choose and approve the final route was thorough and transparent.

This case study shows how the law is generally on quite a high level and is not particularly prescriptive on the way the public participation process must be implemented. This is important, because it allows for identifying the stakeholders and adopting a method of engaging that is suitable under the circumstances.

Clear, credible, and meaningful consultation

The onus lies with the applicant of a petroleum right to ensure that all reasonable measures to consult meaningfully with all relevant stakeholders for any exploration activity are taken. It is essential that a comprehensive public participation process be followed.

Applicants must investigate different ways of communicating with the various stakeholder groups, ensuring that they use the most suitable platform to reach these stakeholders effectively. It is vital for applicants of petroleum rights to break down the information – including the environmental impact assessment reports and any other stakeholder engagement documents – in such a way that it clearly articulates the risks and mitigation measures to be used.

More comprehensive or detailed information must also be accessible should the stakeholders want to look beyond the question-and-answer discussions.

A project to connect four provinces

The International Energy Agency’s “Africa Energy Outlook 2022” report states that natural gas is important for the continent’s industrialisation, in addition to providing a reliable energy supply.

The Sanral N2 Wild Coast Road Project, which was delayed for more than 10 years, is finally bearing fruit. In 2022, Sanral announced over R76m in seven new contracts to benefit local communities that live around the site of the N2 project. A total amount of R278m has been paid to over 100 local SMMEs, including 28 suppliers, 52 service providers and 27 subcontractors, which are undertaking work on the Msikaba Bridge project alone.

In addition, R45.9m was paid in wages to over 300 skilled and unskilled workers who, were drawn from the surrounding communities and the municipalities of Port St Johns, Ingquza Hill and Winnie Madikizela Mandela.

Once completed, the road will connect four provinces – the Western Cape, the Eastern Cape, KwaZulu-Natal and Mpumalanga – and the cities and towns of Cape Town, George, Knysna, Gqeberha (Port Elizabeth), East London, Mthatha, Durban and Ermelo.

The route will be approximately 69km and 85km shorter respectively than the current N2 and R61 routes. This means it will be between 1½ and 3 hours faster for light and heavy freight vehicles to travel on it. This upgrade will significantly reduce vehicle carbon emissions and result in a time-cost saving to motorists and freight operators of approximately R1.5bn a year.

Proper public participation remains a vital part of expediting these developments to ensure ecological sustainability and allay community fears of being left out of the potential economic benefits.

In December Pasa will issue new guidelines to ensure that all stakeholder rights are upheld as SA unlocks its upstream oil and gas potential to address the energy and economic crises the country faces.

The writer is the CEO of Pasa