Govt: South Africa Shale Exploration "to Start in 2016/17"

The South African government expects shale gas exploration to start in the financial year starting April 2016.

Rural Development minister Gugile Nkwinti said that developing shale gas represents "a real opportunity for South Africa." He was briefing media on March 8 about the implementation of economic and infrastructure aspects of a nine-point plan outlined by President Jacob Zuma a month ago.

“Exploration activities are scheduled to commence in the next financial year,” said Nkwinti noting that South Africa had published new shale gas regulations in the second quarter of 2015/16. This January the government declared that South Africa has the world’s fifth-largest shale gas reserves.

Royal Dutch Shell in 2011 said it was willing to invest $200mn in the remote onshore Karoo basin on initial drilling; it and other explorers have expressed impatience at regulatory delays since then. Dublin-based firm Falcon has a large 'technical cooperation' license in the Karoo.

A Shell spokesperson told Natural Gas Africa later on March 8: "To date no exploration licenses have been issued in South Africa for tight/shale gas development. We will continue our ongoing consultation with government, industry and the people of South Africa about the long term opportunities of shale gas exploration and the regulations that will govern this industry. Should attractive commercial terms be put in place, the Karoo project could compete favourably within Shell's global tight/shale gas and oil portfolio."

Turning to the offshore sector, Nkwinti also said a public-private partnership to establish Saldanha Bay as an upstream oil and gas hub had raised 9.2bn rand ($600mn) of investment to be spent over the next five years. "Work on the offshore supply base has already commenced, which will see Saldanha Bay attracting oil rigs for maintenance and repair… creating secondary job opportunities."

Offshore acreage holders include local Sasol and state PetroSA, plus ExxonMobil, Anadarko and Shell. Last week Exxon CEO Rex Tillerson told investors that exploration offshore South Africa presents "moderately higher risk but also much higher potential" than its West Africa exploration.   

Mark Smedley