UPDATE 1-South Africa to start shale gas exploration in next year

Tue Mar 8, 2016 11:49am EST
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(Adds Shell comment, details, background)

CAPE TOWN, March 8 (Reuters) - South Africa will give the green light in the next 12 months to companies looking to explore for shale gas under the semi-arid Karoo basin, the government said on Tuesday, more than six years after firms such as Shell applied for licences.

Royal Dutch Shell, Falcon Oil & Gas and Bundu Gas & Oil are among five companies which have applied for exploration licences being reviewed by South Africa's Petroleum Agency, the regulator said on Tuesday.

The Petroleum Agency will submit its recommendations to the government by early May. The ministry of mineral resources will make the final decision on granting licenses.

"One area of real opportunity for South Africa is the exploration of shale gas," a statement from cabinet ministers responsible for the economy said.

"Exploration activities are scheduled to commence in the next financial year. This will lead to excellent prospects for beneficiation and add value to our mineral wealth."

Shell said last March it was pulling back from shale gas projects in South Africa due to lower energy prices and delays in obtaining exploration licences.

The energy major, however, said on Tuesday it could still have an interest in exploring in the Karoo.

"Should attractive commercial terms be put in place, the Karoo project could compete favourably within Shell's global tight/shale gas and oil portfolio," the company told Reuters.   Continued...