Royal Dutch Shell is pulling back from its shale projects in South Africa due to lower energy prices although it is still seeking an exploration license for the onshore Karoo Basin, its country manager said on Monday.
A more than halving of crude oil prices since June last year has put high cost projects such as shale gas exploration in jeopardy around the globe, Shell South Africa Chairman Bonang Mohale told Johannesburg station Talk Radio 702.
“The reason to go to a low cost holding position … is as a result of a difficult period for world (prices),” Mohale said.
Shell’s retreat is a blow to the South African government, which has been criticised by oil firms for delaying issuing exploration licenses, most notably in the Karoo, which is believed to hold up to 390 trillion cubic feet of technically recoverable reserves.
Shell has been waiting for six years for an exploration licence.
“What is of concern is regulatory uncertainty,” Mohale said. “We have waited inordinately long for licenses.”
Green groups and land owners in the Karoo, a vast semi-desert wilderness stretching across the heart of South Africa, have argued that exploring for shale by fracking, or hydraulic fracturing, would cause huge environmental damage.
(Reporting by Ed Cropley; Writing by Joe Brock; Editing by Ed Cropley – RIZGZONE)