Falcon Oil & Gas Limited may start shale gas exploration later this year in South Africa

gas-sa-johnny choura-flickrThe Karoo Basin, in the southern part of the country, is expected to hold 11 trillion cu m of technically recoverable gas. (Image source: Johnny Choura/Flickr)Falcon Oil & Gas Limited has announced that it expects to be awarded a permit to start gas exploration at its shale plot in the Karoo Basin in South Africa in the second half of 2014

In an interview with Bloomberg, Philip O’Quigley, CEO of Falcon Oil & Gas Limited, said, “Our focus will be South Africa over the next 12 months.”

The Dublin-based company, which signed a five-year exclusive co-operation agreement with Chevron in 2012, may sell a stake in the asset following the approval.

The Karoo Basin, in the southern part of the country, is expected to hold 11 trillion cu m of technically recoverable gas, making it the world’s eighth-biggest shale-gas deposit, according to the US Energy Information Administration.

Ngoako Ramatlhodi, minister of mineral resources, said, “The development of an upstream oil and gas industry will be a focus during the next five years. We want to unlock investment as quickly as possible.”

South Africa has already published draft regulations for the shale gas industry, which requires companies to meet American Petroleum Institute standards governing the type of equipment used and the disclosure of chemicals. Final rules are due to be issued in the next few months, the government said.

Earlier this year, the Parliament had approved separate legislation which will grant the government the right to take a 20 per cent free stake in all new oil and gas projects and acquire a further unspecified share at an agreed price.

President Jacob Zuma was asked to hold off on signing the law pending a review by a ministerial committee that will aim to ensure the law doesn’t discourage investment, Ramatlhodi said.

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