Shell Pulls Out of South African Shale Gas Space

Low energy prices and regulatory delays have forced Shell to pull back from its shale projects in South Africa, news agency Reuters reported Monday.

Shell South Africa Chairman Bonang Mohale told Reuters that oil prices would need to be between $60 and $80 a barrel and South Africa would need to present “excellent commercial terms” for the company to resume its operations.

“Capital is mobile and is looking for the best commercial terms everywhere else in the world,” Mohale said. “We were hoping that we would have had a licence (for Karoo) in 36 months.”

According to Reuters, Shell's retreat is a blow to the South African government, which has been criticised by oil firms for delaying issuing exploration licenses, most notably in the Karoo region, which is believed to hold up to 390 trillion cubic feet of technically recoverable reserves.