South Africa’s legacy national oil company, PetroSA, has approved a landmark deal granting Shell Offshore a 60% stake in its Block 2C off the country’s west coast, significantly strengthening the oil major’s exposure to the highly coveted Orange Basin exploration zone.
According to a document seen by Reuters on Monday, Shell will provide a 25 million dollar signing bonus and cover the full cost of drilling three wells, estimated at 135 to 150 million dollars. PetroSA currently holds 100% of Block 2C, pending completion of the deal.
If successfully concluded, the agreement will bolster Shell’s position in the Orange Basin, which has become one of the world’s most promising oil exploration zones following major discoveries in neighboring Namibia. The deal represents a significant vote of confidence in South Africa’s offshore potential and could catalyze further investment in the region.
Shell is already seeking to explore along South Africa’s west coast and in July was granted environmental authorization to drill up to five deep-water wells in the Northern Cape Ultra Deep Block in the Orange Basin, though it has not indicated when drilling will begin.
However, Shell’s exploration plans have faced delays due to court challenges brought by environmental groups. In October, Shell applied to appeal a high court decision blocking exploration in the west coast offshore Block 5/6/7, as various legal cases have postponed planned drilling activities.
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 currently under care and maintenance.
The national regulator PASA confirmed it has not yet received an application to transfer the Block 2C stake, indicating that regulatory approvals are still pending before the deal can be finalized.
Sources: reuters.com, news.az, bairdmaritime.com