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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
CASE NO .: 60924/21
In the matter between:
TETRA4 (PTY) LTD Applicant
and
THE NATIONAL ENERGY REGULATOR First Respondent
THE MINISTER OF MINERAL RESOURCES AND ENERGY Second Respondent
JUDGMENT
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED: NO
Date: 2 May 2025 E van der Schyff
Van der Schyff J
Introduction
[1] The applicant, Tetra 4 (Pty) Ltd (“Tetra4”), approached the court seeking a
declarator on the regulatory reach or proper scope and ambit of the Gas Act 48 of
2001 (“the Gas Act” ). The specific declarators sought in the notice of motion read as
follows:
“1. declaring that the licensing provisions of the Gas Act 48
of 2001 do not apply to any of the production activities
and incidental activities related thereto, as authorised
under a Production Right in respect of petroleum (as
defined) and gran ted in terms of section 84 of the
Mineral and Petroleum Resources Development Act 28
of 2002;
2. declaring that the Applicant does not require a licence in
terms of section 15(1)(b) of the Gas Act for the
operation of its production plant, including the
liquefaction plant constructed or to be constructed for its
Virginia Gas Project;
3. declaring that the Applicant does not require a licence in
terms of section 15(1)(c) of the Gas Act for the trading in
gas outside of the Piped Gas Industry. ”
[2] When the matter was heard, Tetra4 submitted a draft order wherein it seek s
additional consequential relief in that the following NERSA licences are sought to be
set aside:
a) Licence Number G[...] for the purpose of operating a gas
liquefaction f acility;
b) Licence Number G[...]2 for the purpose of operating a gas
storage facility; and
c) Licence Number G[...]3 for the purpose of trading in gas.
[3] The application primarily raises the issue of the interpretation of the Gas Act.
[4] The f irst respondent, the National Energy Regulator of South Africa
(“NERSA”) opposes the application.
Factual matrix
[5] The factual matrix underpinning this application is, for the most part, common
cause . Tetra4 sets out the following common cause facts:
a) On 20 September 2012 , a production right for petroleum was granted
to Tetra4 in terms of s ection 84 of the Mineral and Petroleum
Resources Development Act 28 of 2002 (the MPRDA) . The production
right was duly executed and registered. It entitles Tetra4 to produce or
extract petroleum, which by definition includes natural gas such as coal
bed methane from which helium is later separated;
b) Within its production area, Tetra4 makes use of a closed -loop gas -
gathering network of p ipelines to deliver the gas from the wells of its
production area to its production plant;
c) The production plant is located within the production area and includes
a liquefaction process;
d) The production facility is not connected to the distribution infrastructure
of the Piped Gas Industry;
e) In the production process, helium is separated from the methane gas
through a cryogenic liquefaction and distillation process. In the
process, both helium and methane are liquefied.
[6] NERSA provided additional facts that it re gards as relevant , that is likewise
common cause:
a) Tetra4 drilled four exploration and production wells;
b) Tetra4 installed gas gathering pipelines to collect gas and send it to its
gas processing facility in one of the wells;
c) The gas is cleaned and prepared for compression in the gas
processing facility;
d) From there, the gas is sent to a compressor station where it is
compressed and filled into Compressed Natural Gas (CNG) cylinders .
The CNG cylinders are then transported by trucks to t he customers ’
sites, where gas is measured and then injected into the customers’
buses through a pipeline.
[7] It is common cause that Tetra4 neither distributes, nor transports , nor
transmits bulk gas by pipeline to points of ultimate consumption or to reticulation
systems . Collected mixed gas flow in the Tetra4 system of closed -loop gas -gathering
pipelines from the wells in its production area to its production plant , which is located
within its production area.
The parties’ respective contentions
[8] Tetra4 commences its argument from the viewpoint that the Gas Act regulates
a national grid of pipelines for the distribution of hydrocarbon gas to consumers ,
hence the downstream piped gas industry. Liquefaction in this context is done to
transport gas ec onomically and effectively in liquid form over vast distances. Tetra4
submits that the Gas Act is thus not applicable to the production of petroleum as an
upstream activity under an existing Production Right which was granted in terms of
the MPRDA . Where the liquefaction process occurs as part of the production
process , it falls not under the piped gas industry but the petroleum extractive
industry.
[9] Tetra4 places heavy emphasis on the fact that the methane gas produced is
liquefied within a product ion plant as part of upstream production. The production
plant is not connected to the distribution infrastructure of the piped gas industry.
Ownership of what Tetra4 describes as ‘the upstream petroleum products (such as
the methane gas) as well as any by products thereof (such as helium) remains with
Tetra4 and is not traded , as per the definition of trading in the Gas Act, or transferred
during the process of upstream production in the production area of Tetra4.
[10] Tetra4 applied for and was granted a licen ce under section 15 of the Gas Act
for its liquefaction facilities. I pause to note that NERSA avers that the licence was
obtained for a storage facility. Tetra4 avers that the licence was applied for
exclusively to comply with due diligence clauses in inv estment contracts concluded
with foreign investors . Tetra4 was under pressure to qualify for a foreign investment
from the Government of the United States of America. NERSA was, however,
informed from the outset of Tetra4’s view that, apart from section 28 thereof, the Gas
Act does not apply to its production activities, and that Tetra4 believes its operations
do not fall under NERSA's purview.
[11] Tetra4 holds the view that all of its production and incidental activities related
thereto, under and in terms of its production right issued in terms of the MPRDA , fall
outside the scope, ambit, and field of application of the Gas Act. Regarding its
undisputed sale of methane gas, Tetra4 submits that the gas it produces falls outside
the definition of ‘gas’ contained in the Gas Act, and that its sale operations do not fall
under the definition of ‘trading’ as defined in the Gas Act. Tra ding is defined in the
Gas Act as ‘purchasing and selling’ of gas and not ‘producing and selling’ as Tetra4
is currently doing.
[12] In its founding papers, Tetra4 identified four issues, which it termed narrower
issues, for determination:
a) Whether the product ion plant of Tetra4, together with its liquefaction
plant and its closed -loop gas -gathering networ k of pipelines for the
collection of the mixed gas from the various wells in its production area
falls within the field of application of the Gas Act;
b) Whether Tetra4 was required to obtain a construction licence for its
production plant in terms of s 15(1)(a) of the Gas Act;
c) Whether Tetra4 was required to obtain an operational licence for its
production plant in terms of s 15(1)(b) of the Gas Act;
d) Whether Tetra 4 is required to obtain a trading licence for the products
(methane and/or helium) as produced in its production plant in terms of
section 15(1)(c) of the Gas Act where those products are not supplied
to the national grid under the custodianship of NERSA, as Gas
Regulator.
[13] NERSA submitted that the court should exercise its discretion against
granting any of the declaratory orders Tetra4 seeks. NERSA avers that Tetra4
solicits legal advice from the court, since Tetra4 does not, in its papers, seek the
review and setting aside of the licences granted. These licences, NERSA contends,
valid or not, will remain in place and have legal consequences for a period of 25
years unless revoked by NERSA, or set aside by a court in proceedings for judicial
review.
[14] NERSA contends that on a proper interpretation of the Gas Act and in light of
the common cause facts , the activities for which Tetra4 has been licenced by
NERSA are subject to regulation under the Gas Act. There are many statutes that
grant various regulators concurrent jurisdic tion to regulate the same or similar
matters.
[15] NERSA submits that the only issue for determination arising from the pleaded
case, having regard to the existing licences and the absence of a review application,
is whether Tetra4’s construction and operation of its liquefaction facility, storage and
transportation of gas, as well as its trading activities in gas fall within the ambit of the
Gas Act. NERSA contends that a licence was granted for a storage facility because
the compression aspect and operation o f storage facilities by Tetra4 can be
described as midstream activities.
[16] NERSA claims that it does not licence the production and processing of gas
as upstream activities, since these activities fall within the domain of the Petroleum
Agency of South Africa. NERSA contends that the operation of the CNG and
liquefaction facilities falls within its regulatory purvie w. The proximity of a liquefaction
facility to production facilities is irrelevant. NERSA avers:
“Tetra4 produces gas and cleans it. This is regulated as an
upstream activity under PASA. However, the gas is produced
with the sole intention to be taken to the market for sale and
this is where NERSA gets involved. The fact that the
processing facility is located next to the liquefaction facility
does not make the latter an upstream activity that should not
be licenced by NERSA. ”
[17] NERSA contends that Tetra4 stores the gas it sells in its CNG cylinders. By
selling gas, NERSA avers, Tetra4 trades in gas.
[18] NERSA denies that a connection to the national pipeline grid is an essential
requirement for the Gas Act to find application. NERSA notes that the oil and gas
industries have generally used various types of pipelines since the inception of their
piped -gas businesses. These include gathering pipelines , feeder pipelines,
transmission pipelines , and distribution pipelines. Each of these different types of
pipelines falls within the dictionary meaning of a ‘pipe’ and all are used in the
transportation of gas.
Preliminary remarks
[19] The Supreme Court of Appeal made it clear that when interpreting a statute,
the factual circumstances of a case have no bearing on the analysis.1 In the current
matter, NERSA disputes the need to engage in the interpretative exercise. NERSA
conte nds that Tetra4 did not seek any consequential relief in its founding papers ,
only declarator y relief . NERSA contends that the issue on which declaratory relief is
sought is academic because Tetra4 is currently the holder of licences issued in
terms of the Gas Act.
[20] NERSA submits that the relief sought in the notice of motion does not amount
to a review application . Tetra4 did not, in the notice of motion, seek the setting aside
of the decision to grant the licences. NERSA submits that the additional relie f sought
when the matter was heard should not be considered, as it was not included in the
original relief requested . Tetra4 contends that the relief subsequently sought is
consequential relief that flow s naturally from a finding that the scope of the Gas Act
is to be limited in accordance with the interpretation proposed by Tetra4.
[21] This issue requires the court to revisit the legal principles applicable when
declaratory relief is considered.
When will a court consider granting declaratory relief?
[22] In Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd2 Jafta
J said of s ection 19(1)(a)(iii) of the Supreme Court Act 59 of 1959, the
predecessor to s ection 21(1)(a) of the Superior Courts Act 10 of 2013, that:
“Although the existence of a dispute between the parties is not
a prerequisite for the exercise of the power conferred upo n the
High Court by the subsection, at least there must be interested
parties on whom the declaratory order would be binding. The
applicant in a case such as the present must satisfy the court
1 Desert Place Hotel Resort (Pty) Ltd v Northern Cape Gambling Board 2007 (3) SA 187 (SCA) at
para [7].
2 2005 (6) SA 205 (SCA) at para [16].
that he/she is a person interested in an “existing, future or
contingent right or obligation” and noting more is required. ”
[23] When an applicant has satisfied the court that they are a person, natural or
juristic, interested in an ‘existing, future, or contingent right or obligation’, the court
must decide whether the c ase is a proper one for the exercise of the discretion
conferred upon it.3
[24] While the absence of an existing dispute is not an absolute bar to the grant of
a declaratory order, a court may decline to grant such an order if it regards the
question raised before it as hypothetical, abstract or academic.4
[25] In Clear Enterprises (Pty) Ltd v Commissioner for the South African Revenue
Services and Others5 the Supreme Court of Appeal opined that the interpretative
exercise that stood to be undertaken if the declaratory relief was to be considered,
did not concern a ‘discrete point of statutory construction’ but that it would be
inextricably linked to the facts. Thus, the court held ‘absent an undisputed factual
substratum, it would be extremely difficult to define the limits of the declaratory relief
that should issue’ ( sic.)6 In Radio Pretoria v Chairman, Independent Communications
Authority of South Africa7 reiterated that courts -
‘do not give advice gratuitously. They decide real disputes and
do not speculate or theorise… Furthermore, statutory
enactments are to be applied to or interpreted against
particular facts and disputes and not in isolation.’
3 Durban City Council v Association of Building Soc ieties 1942 AD 27 at 32, Family Benefit Friendly
Society v Commissioner for Inland Revenue 1994 (2) PH F43 (TPD), Association for Voluntary
Sterilization of South Africa v Standard Trust Limited and Others (325/2022) [2023] ZASCA 87 (7
June 2023) at para [10].
4 Association for Voluntary Sterilization of South Africa v Standard Trust Limited and Others, supra, at
para [12], West Coast Rock Lobster Association and Others v Minister of Environmental Affairs and
Tourism and Others [2011] 1 All SA 487 (SCA) at para [45].
5 [2011] ZASCA 164 (SCA) at paras [16] -[19].
6 Clear Enterprises (Pty) Ltd v Commissioner for the South African Revenue Services, supra, at para
[16].
7 2005 (1) SA 47 (SCA) at para [41].
[26] In Geldenhuys & Neethling v Be uthin8 Innes CJ observed -
“After all, Courts of Law exist for the settlement of concrete
controversies and actual infringements of rights, not to
pronounce upon abstract questions or to advise upon differing
contentions, however important. ”
[27] The mere fact that existing licen ces have been granted to Tetra4 does not
mean that there is no ongoing dispute between the parties , as evidenced by the
consequential relief now expressly sought by Tetra4. This aspect of the application
will be revisited below. However, s ection 21(1)(c) of the Superior Courts Act 10 of
2013 explicitly provides that the court can, in its discretion, enquire into and
determine any ‘existing, future or contingent right or obligation, notwithstanding that
the interes ted person who seeks the relief, ‘cannot claim any relief consequential
upon the determination’. Where c onsequential relief is claimed in addition to seeking
declaratory relief, it indicates a live or existing dispute between the parties; however,
it is no t a jurisdictional requirement for granting declaratory relief.
[28] Determining the scope and ambit of the regulatory regime embodied in the
Gas Act against the factual matrix of the application is a question of law that stands
to be determined without regard to the specific facts of Tetra4’s situation, although
the application of this interpretation will have a direct impact on Tetra4 . The
declaratory relief sought will define the parties’ rights regarding the legal question
that underpins this application and state the existing legal situation. The affidavits
reveal the existence of a genuine dispute that is not theoretical or abstract. NERSA
has an interest in opposing the declarat or sought, and this ironically supports
Tetra4’s submission that this case meets the requirement for declaratory relief to be
granted. The declaration will have a practical effect once it is granted , as it will clarify
a pre -existing position in delineating the regulatory ambit of the Gas Act and
determi ning the parties’ rights and the limits thereof in terms of the Act . A declaration
will guarantee certainty and accountability. In the circumstances and having regard
8 1918 AD 426 at 441.
to the parties’ relationship, i t will not only amount to presenting an answer to a
hypoth etical question of law.
Determining the scope and regulatory reach of the Gas Act
Interpretation guidelines
[29] The principles that courts apply when interpreting statutes, as well as the
process through which they apply these principles, reflect the constitutional
relationship between the courts and the other branches of government. It is the
court’s role to make legally binding decisions regarding the interpretation of statutes
when disputes arise. Whenever the court is calle d upon to interpret legislation, it
calls to the fore the constitutionally entrenched relationship between the legislative
and executive branches of government. The constitutional limits of judicial power
prohibit courts from writing or rewriting statutes and set the permissible bounds of
interpretation. If there are omissions or vacuums in a statute, rectification is the
mechanism to remedy such shortcomings. The legislature must remedy any
omissions, as the court is not the drafter of legislation.
[30] It is trite that South African courts have moved away from a literal
interpretation of statutes to one where both the text and context play a role, ‘even
where the words to be construed are clear and unambiguous’.9 The court’s task,
within the permissible bo unds of interpretation, is to give effect to the purpose of the
statute under consideration . Controversial provisions should thus be read in the
context of the statute as a whole, and the statute as a whole should be read in the
historical context of the s ituation which led to its enactment .10
[31] Context is multi -layered or multifaceted. An essential part, and the core facet
of the context within which any statute stands to be interpreted, is the constitutional
imperative that legislation must be interpreted in a manner that promotes the spirit,
9 Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism and Others 2004 (4) SA
490 (CC) at para [90].
10 The principle likewise finds application in other legal jurisdictions, and was aptly verbalised by Lord
Bingham in R (Quintavalle) v Secretary of State for Health [2003] 2 AC 687 at paras [7] and [8] –
referred to by Wallis M ‘Interpretation Before and After Natal Joint Municipal Pension Fund v Edumeni
Municipality 2012 4 SA 593 (SCA)’ PER/PELJ 2019 (22) 9.
purport, and objects of the Bill of Rights.11 Context is furthermore obtained through a
reasoned assessment of the broad purpose underlying a statute’s enactment. This
often requires a consideration of the mischief the legislature sought to address by
enacting the specific statute. Legislative history is thus another sourc e of relevant
context.12 Context is also provided by the content of the legislation as a whole.
[32] Context can never be used or relied on to create a meaning that the
language, when viewed in context, is incapable of bearing.13 This would be crossing
the co nstitutional boundaries of interpretation. Text and context play a unique yet co -
determinative role in the interpretation process. Neither is predominant, but both are
elements of a unitary interpretative process. The clearer the language used in the
text and the more obvious its meaning in accordance with the ordinary
understanding of language, the less the influence of context in arriving at a
conclusion. The more meanings there are and the more finely balanced they are, the
more powerful the influence of contextual factors will be.14
The Gas Act
[33] The Gas Act was assented to on 12 February 2002 and commenced on 1
November 2005. It is proclaimed in the preamble that the Act was promulgated to :
a) promote the order ly development of the piped gas industry,
b) establish a national regulatory framework;
c) establish a National Gas Regulator as the custodian and enforcer of
the national regulatory framework, and
d) provide for matters connected therewith.
11 S 39(2) of the Constitutio n.
12 Santam Insurance Ltd v Taulor 1985 (1) SA 514 (A) 526 -527B.
13 Wallis, note 10, above, 15.
14 Note 10, above, 14.
[34] The definition section of the Gas Act commences with a disclaimer. The
meaning attributed to specific words or phrases in the Gas Act bears the particular
meaning contained in the definition section, ‘unless the context indicates
otherwise.’15
[35] Gas is defined as:
“all hydrocarbon gases transported by pipeline, including
natural gas, artificial gas, hydrogen rich gas, methane rich gas,
synthetic gas, coal bed methane gas, liquefied natural gas,
compressed natural gas, re -gasified liquefied natural gas,
liquefied petroleum gas or any combination thereof. ”
[36] Other relevant definitions are:
“distribution ” means the distribution of bulk gas supplies and
the transportation thereof by pipelines with a general operating
pressure of more than 2 bar gauge and less than 15 bar gauge
or by pipelines with such other operating pressure as the
National Energy Regulator may permit according to criteria
prescribed by regulation to points of ultimate consumption or to
reticulation systems, or to both points of ultimate consumption
and to reticulation systems, and any other activity incidental
thereto, and “distribute” and “distributing” have corresponding
meanings.
“liquefaction” means converting natural gas from a gaseous
state to a liquid state;
“mine” means “mine” as defined in the Minerals Act, 1991 (Act
No. 31 of 1991) [the Minerals Act is Act 50 of 1991] ;16
15 S 1 of the Gas Act.
16 The term, when used as a noun, is defined in the now repealed Minerals Act 50 of 1991 -
“mine” means, when —
“production” means the recovery, processing, treating and
gathering of gas from wells in the earth up to the boundary of
the mine, or the manufacture of synthetic or artificial gas, or the
manufacturing of any gases in the refining process up to the
boundary of the factory, and any other activity incidental
thereto, and “produce” and “producing” have corresponding
meanings;
“re-gasification ” means converting liquefied natural gas to a
gaseous state at a re -gasification plant;
“storage” means the holding of gas as a service and any
other activity incidental thereto, but excludes storage of gas in
pipelines which are used primarily for the tr ansmission and
distribution of gas;
“trading” means the purchase and sale of gas as a
commodity by any person and any services associated
therewith, excluding the construction and operation of
transmission, storage , and distribution systems, and “trading
services” has a corresponding meaning;
“transmission” means the bulk transportation of gas by
pipeline supplied between a source of supply and a distributor,
reticulator, storage company , or eligible customer, or an y other
(a) used as a noun
(i) any excavation in the earth, including the portion under the sea or under other
water or in any tailings, as well as any borehole, whether being worked or not,
made for the purpose of searching for or winning a mineral; or
(ii) any other place wh ere a mineral deposit is being exploited,
including the mining area and all buildings, structures, machinery, mine dumps,
access roads or objects situated on such area and which are used or intended to be
used in connection with such searching, winning or exploitation or for the processing
of such mineral: Provided that if two or more such excavations, boreholes or places, or
excavations, boreholes and places, are being worked in conjunction with one another,
they shall be deemed to comprise one mine unless the Director: Mineral Development
notifies the owner thereof in writing that such excavations, boreholes or places, or
excavations, boreholes and places, comprise two or more mines’
activity incidental thereto, and “transmit” and “transmitting”
have corresponding meanings;
[37] The objects of the Act, as captured in s ection 2, are to –
“(a) promote the efficient, effective, sustainable and orderly
development and operation of gas transmission, storage,
distribution, liquefaction and re -gasification facilities and the
provision of efficient, effective and sustainable gas
transmission, storage, distribution, liquefaction, re -gasification
and trading services;
(b) facilitate investment in the gas industry;
(c) ensure the safe, efficient, economic , and environmentally
responsible transmission, distribution, storage, liquefaction ,
and re -gasification of gas;
(d) promote companies in the gas industry that are owned or
controlled by historically disadvantaged South Africans by
means of licence conditions so as to enable them to become
competitive;
(e) ensure that gas transmission, storage, distribution, trading,
liquefaction and re -gasification services are provided on an
equitable basis and that the interests and needs of all parties
concerned are taken into consideration;
( f ) promote skills among employees in the gas industry;
(g) promote employment equity in the gas industry;
(h) promote the development of competitive m arkets for gas
and gas services;
(i) facilitate gas trade between the Republic and other
countries; and
(j) promote access to gas in an affordable and safe manner. ”
[38] The Gas Act ascribes certain functions to the Gas Regulator in section 4
thereof . This include the issue of licences for (i) the construction of gas
transmission, storage, distribution, liquefaction and re -gasification facilities; (ii)
the conversion of infrastructure into transmission, storage, distribution,
liquefaction and re -gasificatio n facilities; (iii) operation of gas transmission,
storage, distribution, liquefaction and re -gasification facilities; and (iv) trading
in gas. The Gas Regulator is also tasked with promoting the optimal use of
available gas resources and to promote compet ition in the gas industry.
[39] Section 15 of the Act prescribes the activities that require a licence. The
section provides that –
“(1) No person may without a licence issued by the Gas
Regulator —
(a) construct gas transmission, storage, distribution,
liquefaction and re -gasification facilities or convert
infrastructure into such facilities;
(b) operate gas transmission, storage, distribution,
liquefaction or re - gasification facilities; or
(c) trade in gas. ”
[40] Section 28 of the A ct requir es that the owner of an operation involving the
production or importation of gas, a person engaged in the transmission of gas for
that person’s exclusive use, and small biogas projects in rural communities not
connected to the national pipeline grid, must register their operations with the Gas
Regulator.
Discussion
[41] Oil and gas are major industries in the energy market , playing a significant
role in the global economy as the world’s primary fuel sources. South Africa has
initiated the transition from a fossil fuel -based electricity generation system to one
based on renewable sources, aiming to meet its greenhouse gas emission reduction
goals.17 The Integrated Resource Plan (IRP) is a government -developed p lan that
attempts to forecast the elements needed for power generation in the future. Gas-
fueled dispatchable energy generation is considered to be a significant element of
this forecast .18 Currently, natural gas contributes 3% to the total energy supply in the
country.19 Gas can play a significant role in the energy mix in the sectors of electricity
production (gas to power) and transportation (gas -to-liquid, compressed natural g as,
and liquefied natural gas).20
[42] In this matter, both parties explained that t he gas value chain in South Africa
consists of three value chain component s: upstream, midstream, and downstream.21
The exploration for and production of gas constitute the upstream component . The
midstream component 's role is to transport and store gas. The downstream
component is responsible for distributing gas to end -users . Both parties rely on the
differentiation between these component s to substantiate their respective views.
Tetra4 essentially argues that liquefaction in their production area occurs as part of
the production phase and is an upstream activity , not regulated by NERSA but by the
Petroleum Agency of South Africa. NERSA argues that liquefaction is a midstream
activity irrespective of whether it occurs in the production area.
[43] It is declared in the preamble to the Gas Act that the Act was promulgated to
promote the orderly development of the piped gas industry.22 The term ‘industry ’
broadly deno tes an organi sed economic activity concerned with manufacturing,
17 See Clark, S., Van Niekerk, J., Petrie, J., and McGregor C. ‘The role of natural gas in facilitating the
transition to renewable electricity generation in South Africa’ Journal of Energy in South Africa 2022,
vol 33:3 .
18 Integrated Resource Plan Department of Energy 2011 – 2019. Each iteration of the IRP mentions
the use of gas for dispatchable energy generation. In the 2023 IRP it is reiterated that natural gas has
emerged as a critical part of South Africa’s future energy mix.
19 The South African Energy Sector Report 2023, Department Mineral resources and Energy .
20 Mokrani, T. ‘The Role of Natural Gas in the South African Energy Mix’ Chemical Engineering
Transactions 2022, vol 96.
21 A similar explanation is set out in the Gas Master Plan published in Government Gazette No. 50569
on 26 April 2024, 48.
22 The various aspects listed in the preamble should be read in conjunction with one another. Read in
seclusion, the second declaration in the preamble that the Gas Act was promulgated to establish a
national regulatory framework, is incomplete and does not m ake sense. If the question is asked, what
national regulatory framework is to be established in terms of the Act, the answer is found in the first
declaration – a national regulatory framework for the piped gas industry.
extracting and processing raw materials .23 The gas industry , in general, is thus
concerned with the exploration, extraction, refining, transportation, storage , and
distribution of gas.
[44] This raises the question of what the ‘piped gas industry’ comprises. To give
meaning to the term ‘piped gas industry’, and simulta neously determining the
regulatory scope of the Gas Act , it is informative and relevant that the definition of
gas in the Gas Act defines the term gas as all hydrocarbon gases transported by
pipeline.24
[45] The definition of the term' gas’ in the Gas Act limits its meaning to a distinct
class of compounds, to wit, hydrocarbon gases. This definition excludes any noble
gas from the ambit of the Act. As it currently reads, the Gas Act does not provide the
regula tory context within which the transmission, storage, distribution, liquefaction,
re-gasification, and trade of non -hydrocarbon gases like noble gases are regulated .
Helium is a noble gas, and this disposes of the question of whether helium is
regulated in terms of the Gas Act.
[46] Different types and phases of hydrocarbon gases are then listed in the
definition to emphasise the broad application matrix of the Gas Act as it pertains to
hydrocarbon gases. The h ydrocarbon gas in question can be natural gas, artificial
gas, or synthetic gas. This clearly indicates that all hydrocarbon gases fall within the
definition of the term ‘gas', irrespective of whether the hydrocarbon gas in question is
naturally occurring , produced artificially , or synthetically. The composition of
hydrocarbon gas is irrelevant for the purposes of the definition of gas . Hence, it
includes hydrogen rich, methane rich or coal bed methane gas. The specific phase
or state of a hydrocarbon gas when converted from its gase ous state to a liquefied
state, or the reduction of the hydrocarbon gas volume, does not exempt it from the
scope of the Gas Act. Hence, the hydrocarbon gas is still defined as a gas , whether
23 Collins English Dictionary. The term is defined in the Cambridge Dictionary as ‘the companies and
activities involved in the process of producing goods for sale, especially in a factory or specialised
area.’ The term can also refer to a specific type of business.
24 Section 1 of the Gas Act commences with a disclaimer ‘unless the context indicates otherwise’.
This is the context within which the term is used in the Act.
it is a compressed gas, liquefied natural gas, re -gasified lique fied gas, or liquefied
petroleum gas.
[47] The definition, however, does not end with the scientific identification of the
substance to which the Gas Act relates. It adds an additional identifying
characteristic to the hydrocarbon gas regulated under the Gas A ct, namely, its mode
of transportation.
[48] By specifically defining the term ‘gas’ in relation to the substance's
transportation method , irrespective of its state or form, the application field of the
Gas Act and the Gas Regulator’s regulatory ambit are limited to exclude upstream
production activities.
[49] Production refers to the recovery, processing, treating , and gathering of gas
from wells in the earth up to the boundary of the mine, or the production area.25 The
gas is not static in this process, it flows through pipes. However, this flowing or
moving of the gas cannot be regarded as the transport ation of ga s since the gas is
not transported by pipeline between a supplier and another point of consumption or
reticulation across the boundaries of the production area. NERSA’s submission that
the gas is transported by pipeline in Tetra4’s production area, hence m eeting the
requirement of ‘transported by pipeline’, does not hold water if read in conjunction
with the definition of production. It is insightful that a differentiation is made in
terminology used in the Gas Master Plan when reference is made to ‘indigen ous
natural gas production’ on the one hand, and ‘the importation of natural gas, in the
form of piped gas and LNG from neighbouring countries’.26 The identification of gas
transported in a pipeline by the usage of the term ‘piped gas’ is acknowledged and
confirmed by policymakers in the sector.
[50] By referring to the piped gas industry and limiting the meaning of the term gas
to gas transported by pipeline, the legislature limited the application sphere of the
Gas Act to the midstream and downstream activities related to gas. This conclusion
is supp orted when regard is had to the definition of trading as contained in the Gas
25 S1 of the Gas Act.
26 Gas Master Plan, supra 72.
Act. The term is defined as the ‘buying and selling’ of gas. The legislature clearly did
not anticipate a scenario where gas would be produced and sold by the same entity.
[51] This limited application scope of the Gas Act is ascribed to the fact that the
gas industry in South Africa , to date, primarily comprise s hydrocarbon gas
transported by pipeline from Mozambique . Until recently, a ll gas operations were
linked to the national pipeline grid . South Africa’s primary gas supply originated from
the Pande and Temane fields in Mozambique and was transported via the ROMPCO
pipeline, jointly owned by Sasol and the governments of Mozambique and South
Africa, to Sasol’s facilitie s in Sasolburg and Secunda. Other national pipelines are
the Lilly Pipeline owned by Transnet that carries methane -rich gas from Sasol in
Secunda to Durban with offtake points in Newcastle, Empangeni, Richards Bay, and
Durban. Sasol owns and operates sever al gas pipelines originating in Secunda,
reaching destinations such as Johannesburg, Ekurhuleni, Pretoria, Sasolburg, and
Emalahleni. PetroSA owns a subsea pipeline to Mossel Bay. The Gas Act came into
existence in this specific context. It has its genesis in an environment where gas
production occurred elsewhere , and the regulatory authority was only concerned with
regulating the transmission, storage and distribution of gas in the country.
[52] The conclusion reached herein is further supported if regard is had to s ection
4 of the Gas Act. Section 4(a) obliges the Gas Regulator to issue licences for the
construction of transmission, storage, distribution, liquefaction, and re -gasification
facilities. No mention is made of production and the processe s incidental thereto.
Section 4(b), on the other hand, prescribes that the Gas Regulator must gather
information relating to the production, transmission, storage, distribution, trading,
liquefaction, and re -gasification of gas. Production is specifically included in s ection
4(b). Production and liquefaction are listed as separate activities. This supports the
view that liquefaction, regulated in the Gas Act, is the process of converting natural
gas to a liquid to facilitate its transportation in a pipeline . It stands apart from, and
does not refer to , the production of gas where the liquid gas is a byproduct in the
production process of e.g., helium.
[53] The legislature is clearly aware of the limited application scope of the Gas Act,
a fact evinced by the pub lication of the Gas Amendment Bill .27 This Bill proposes to
amend the Gas Act by amending and inserting certain definitions, among others, to
provide for the orderly development of the gas industry and to enhance the national
regulatory framework of the ga s industry. Notably, any reference to the ‘piped’ gas
industry is done away with in this Bill. The definition of the term gas is proposed to
be amended, among other, by deleting the phrase ‘transported by pipeline’. The term
‘distribution’ is proposed to be redefined not to refer exclusive ly to the distribution
and transportation of bulk gas supplies by pipeline, but to include transportation by
pipeline as a possible transportation mechanism.
[54] In the result, I hold that the production of gas and all activities incidental
thereto are excluded from the regulatory ambit of the Gas Act, save for the
requirement to register production operations with the Gas Regulator. NERSA is
correct in submitting that the legislative framew ork of the petroleum extractive
industry, in principle, allows for other regulatory bodies to require that licences be
obtained to authorise certain actions. The necessary legislation must, however, be in
place to empower regulatory authorities to assert r egulatory power. In its current
form, the Gas Act does not empower the Gas Regulator to fulfill a dual regulatory
function as far as the production of gas is concerned.
[55] The Gas Act only finds application when gas that was produced is transported
by pipeline and supplied to a distributor, reticulator, storage company , or eligible
consumer. As far as helium is concerned, the Gas Regulator holds no regulatory
powers over the midstream and downstream activities in volving helium. It is
completely excluded from the Gas Regulator’s regulatory reach.
[56] Courts are called upon to interpret legislation. Courts can, however, not step
into the legislature’s shoes to create legislation where voids exist. This would be
overst epping the clear boundaries set by the principle of separation of powers. If the
legislature intends to extend the Gas Act’s regulatory ambit and NERSA’s custodial
27 B-2023, published in Government Gazette No. 5 0009 of 19 January 2024.
responsibilities to the gas production stage beyond requiring the registration of
production operations , the legislation stands to be amended.
[57] In the factual setting of th e matter before me , Tetra4 gathers, processes, and
treats gas in the production area. Through cryogenic processing, the helium is
separated from the natural gas. The liquid methane is a byproduct of this cryogenic
processing, which is integral to the production of helium . Tetra4’s current operations
do not fall under t he purview of the Gas Regulator.
[58] In addition to the declarators sought, Tetra4 seeks the setting aside of the
licences it applied for and that were issued by NERSA under the Gas Act. Tetra4
submits that the setting aside of these licences is a consequence of a finding that its
activities are not regulated under the Gas Act.
[59] I disagree. Tetrta4 applied for the licences because, on its own version, it was
obliged to do so by its funders and foreign investors . The funders were not cited as
parties to this application. I have had no insight into the agreement concluded
between Tetra4 and its funders. On the face of it, the funders and foreign investors
have a direct interest in an order setting aside the licences. I cannot grant an order
setting asi de the licences in the absence of parties that ostensibly have an interest in
the matter .
[60] In considering the determination of costs, the general principle is that costs
follow success. No case was made out for costs to be granted on a punitive scale.
The issues involved were complex, and both parties were represented by more than
one counsel.
ORDER
In the result, the following declara tors and order are granted:
1. The licensing provisions of the Gas Act 48 of 2001 do not apply to any
of the production activities and incidental activities related thereto,
authorised under a Production Right in respect of petroleum (as
defined) and granted in terms of section 84 of the Mineral and
Petroleum Resources Development Act 28 of 2002;
2. The Applicant does not require a licence in terms of section 15(1)(b) of
the Gas Act for the operation of its production plant, including the
liquefaction plant constructed or to be constructed for its Virginia Gas
Project as long as the liquefaction facility is used during the production
stage of gas ;
3. The Applicant does not require a licence in terms of section 15(1)(c) of
the Gas Act for the trading in gas outside of the Piped Gas Industry ;
4. The First Respondent is to pay the costs of the application on a party
and party scale. Such costs to include the costs of two counsel on
Scale C.
______________________
E van der Schyff
Judge of t he High Court
Delivered: This judgment is handed down electronically by uploading it to the
electronic file of this matter on CaseLines.
For the applicant : Adv. M. Oosthuizen SC
With: Adv. J. Rust SC
Instructed by: Faskens Incorporated
For the first respondent: Adv. N. Maenetjie SC
With: Adv. R. Tshetlo
Adv. S. Mashiane
Instructed by: Cheadle, Thompson & Haysom
Incorporated
Date of the hearing: 6 March 2025
Date of judgment: 2 May 2025