Shell to invest US$200m in SA shale exploration

Royal Dutch Shell (LSE: RDSB.L/Amsterdam: RDSB.AS) said it planned to invest US$200m to explore for shale gas in South Africa’s semi-arid Karoo region.

“If exploration efforts prove that shale contains commercially producible gas volumes, then South Africa could see production from this source within a decade,” Jan Willem Eggink, general manager upstream ventures for Shell’s South African unit, told a news conference.

Petrochemical group Sasol, Anglo American and Falcon Oil and Gas are among those keen to explore for shale gas in the region, with Shell leading the pack with exploration rights pending to 90,000km2.

However, environmental concerns led the country to place a moratorium on oil and gas exploration licences in the area due to issues surrounding fracking practices. The region is renowned as home to rare species such as the mountain zebra and the riverine rabbit.

But those in favour of fracking in the Karoo say the discovery of gas would help the country not only to remedy a chronic shortage but also reduce its dependence on climate-unfriendly coal-fired power stations. “By drawing on potential abundant domestic gas supplies, you can meet rising energy demand while maintaining energy security,” Eggink said.