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SA oil and gas exploration costs soar to kingdom come

Gwede Mantashe wants to charge more in dollars for permits to drill for oil and gas in South African waters.

According to Business Insider SA, Mantashe proposed raising permit fees for such explorations by 12,740%.

For 18 years, a reconnaissance permit for offshore petroleum resources cost R500. That will rise to $3,500, or R64,000 at current exchange rates.

Previously, exploration rights applications and renewals cost R1,000. Mantashe wants to raise it to $4,000, well over R70,000.

Application fees are nonrefundable.

Offshore petroleum explorers must also pay an annual fee based on their claimed ocean floor area. R200,000 per degree square covers 10,000 square kilometres. If their exploration area is small, they can pay R50,000.

The new plan raises the minimum to $50,000 (more than R900,000) at $20 per square km. Like the minimum fee, the per-km baseline converts rand into dollars, increasing by 18.3 times at the current exchange rate.

By the third year of renewal, the minimum payment is $250,000. Fees increase annually by consumer inflation.

Mantashe has advocated for oil and gas development in South Africa, saying it can power development, create jobs, and make the country less vulnerable to imported inflation and energy shocks.

However, coastal communities have resisted seismic mapping of the sea floor, including by Shell.

Regulation amendments that would raise prices are open for public comment until November 22.

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