Falcon Oil CEO expects South Africa shale permit in second half
NIDAA BAKHSH and MIKE COHEN
DUBLIN, Ireland (Bloomberg) -- Falcon Oil & Gas Ltd. expects to be awarded a permit to start exploration at its shale plot in the Karoo basin in South Africa in the second half of the year after technical regulations are published.
“Our focus will be South Africa over the next 12 months,” CEO Philip O’Quigley said in an interview. The Dublin-based company, which signed a five-year exclusive co-operation agreement with Chevron Corp. in 2012, may sell a stake in the asset following the approval.
The Karoo basin in the southern part of the country may have 390 Tcf of technically recoverable gas, making it the world’s eighth-biggest shale-gas deposit, according to the U.S. Energy Information Administration. Falcon holds 7.5 million acres, according to a company presentation.
“The development of an upstream oil and gas industry will be a focus during the next five years,” Mineral Resources Minister Ngoako Ramatlhodi told a lawmakers committee in Cape Town on July 8. “We want to unlock investment as quickly as possible.”
South Africa has published draft regulations for the shale gas industry, which require drillers 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.
Earlier in the year, parliament approved separate legislation which will grant the government the right to take a 20% 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.
“We are delighted the government wants oil and shale gas exploration to start as soon as possible,” O’Quigley said.
Falcon has assets in the Beetaloo basin in Australia, where it’s planning to drill three wells this year, and in Hungary, where it’s looking for a company to further develop the license.