South Africa’s legacy national oil company, PetroSA, has approved a deal to give Shell Offshore a 60 per cent stake in its Block 2C, off the country’s west coast, a document seen by Reuters showed on Monday.
If successfully concluded, the agreement will strengthen oil major Shell’s exposure to the Orange Basin, which has become one of the world’s most coveted exploration zones after major oil discoveries in neighbouring Namibia.
A short note under PetroSA’s priority programmes said the company had approved the farm-in deal to allow Shell Offshore to take a 60 per cent interest, "with Shell committing a $25 million signing bonus and full cost carry (of around $135-$150 million) for three wells".
The chief executive at PetroSA, which holds 100 per cent of Block 2C, pending the deal, did not immediately respond to a request for comment. A Shell spokesperson said commercial sensitivities prevented any comment on "specific opportunities", but added the company was, "continuously evaluating various portfolio options to grow our business".
Shell is already aiming to explore along South Africa’s west coast and in July was granted environmental authorisation to drill up to five deep-water wells in the Northern Cape Ultra Deep Block in the Orange Basin. It has not said when any drilling will begin.
In October, Shell applied to appeal a high court decision blocking exploration in the west coast offshore Block 5/6/7, as a number of court cases brought by environmental groups delay planned drilling.
PetroSA, which this year was incorporated into the new South African National Petroleum Company, holds many assets, including offshore acreage and a gas-to-liquid plant at Mossel Bay in the Western Cape, which is under care and maintenance.
National regulator PASA said it cannot comment on the stake transfer as it has yet to receive an application to transfer interests on existing rights in Block 2C.
(Reporting by Wendell Roelf; editing by Barbara Lewis)
