The Gauteng High Court in Pretoria has ruled in favour of energy company Renergen’s subsidiary Tetra4 in its request for a declarator that the Gas Act does not apply to any production and incidental activities related to upstream petroleum activities, including the requirement for licensing of trading, construction and operation of liquefaction facilities outside the piped gas industry.

Renergen said on May 6 that this ruling was a “landmark legal victory that brings much-needed regulatory clarity to South Africa's petroleum sector”.

The order was granted on May 2 with costs.

The order comes after Tetra4 initiated motion proceedings in the High Court in December 2021 to seek clarification on the jurisdiction of the National Energy Regulator of South Africa (Nersa) regarding certain operational activities.

This order showed that these activities fell under the regulatory purview of the production right granted in accordance with the Mineral and Petroleum Resources Development Act and resolved the ambiguity and potential contradictions arising from disparate sets of legislation affecting Tetra4, Renergen pointed out.

The court found that Tetra4 does not require a Nersa licence for trading in gases such as methane and helium when such trading occurs outside the piped gas industry and does not involve the national pipeline grid or downstream market regulated by Nersa.

In addition, the judgment clarified that the Gas Act regulates only hydrocarbon gases transported by pipeline, and does not cover noble gases such as helium. Therefore, helium production and trading are outside Nersa's regulatory reach.

"This judgment is a landmark win for Tetra4 and the entire upstream gas industry. It affirms that upstream gas production and related activities, including on-site liquefaction, are outside the scope of the Gas Act and Nersa's licensing regime, provided they do not supply the regulated piped gas industry.

“This clarity reduces regulatory duplication, lowers barriers to entry and creates a more enabling environment for upstream gas development in South Africa," CEO Stefano Marani said.