Concern about the free stake the South African government will take in shale gas projects continues to be the main obstacle to foreign investment in exploration in that field, mineral resources officials told MPs on Tuesday.

“The definition of free carry interest in the bill lent itself to a multiplicity of interpretations, so companies have approached us and said they would really like to have some clarity as to what we meant,” the department of mineral resources’ deputy director general Mosa Mabuza told Parliament’s portfolio committee on mineral resources.

He said foreign companies had identified this as their single biggest obstacle to investment and their attitude was understandable given the vast capital input exploration for shale gas entailed.

The department of mineral resources and, Mabuza said, the presidency were hoping the legislature would expedite the passage of the Mineral and Petroleum Resources Development Amendment Bill, which was rushed through the National Assembly before the 2014 elections then brought back for changes.

‘”It is in the hands of Parliament but I think the president understands that it is very critical for us to provide that clarity.

“Hopefully next week they will call us to start. It needs to be referred to the National Council of Provinces, then back to the National Assembly.

Mabuza conceded that the way in which the provision for so-called free carry was phrased in the bill had been “very clumsy”.

“It will still be 20 percent but there will be a clearer indication of how that will work.”

Mabuza insisted that Shell’s decision in March to pull back from its shale gas projects in South Africa was due more to lower energy prices than to delays in obtaining an exploration licence and concern about the automatic stake the legislation would give the government in exploration projects, before companies had covered their costs.

At the time, however, Shell voiced frustration that it was taking more than twice as long as the 36 months it expected to get an exploration licence to start fracking for shale gas in the Karoo.

Answering questions from MPs, Mabuza said all timeframes initially cited with regard to exploring for shale gas had perhaps been unrealistic.  

“If we can get the legislative stuff out there, then in the next seven to ten years we can have a very good idea of what sort of resources we are looking at,” he said.

The US Energy Information Administration estimates that South Africa, which is in the grip of an energy crisis, holds the eighth biggest shale gas reserves in the world.

Shell had applied for an exploration licence for an area about 95 000 square kilometres in size, covering a quarter of the Karoo.