Shell Joins Chase for 'Big Prize' Off South Africa's West Coast

© nikkytok / Adobe Stock
© nikkytok / Adobe Stock

Shell is seeking government permission to drill up to five ultra-deep offshore wells off the west coast of South Africa, a draft scoping report from independent environmental consultancy SLR showed on Tuesday.

The oil major plans to drill exploration and appraisal wells in the area as energy companies shift their focus south of Namibia, where a string of discoveries in its prolific Orange Basin holds the potential of more finds.

The Orange Basin extends southwards into South African waters and has also attracted the interest of rival TotalEnergies, which in March took up acreage in Block 3B/4B, also off the west coast.

Shell Offshore Upstream South Africa B.V. and its joint venture partners need environmental authorisation from the government before they can operate in the Northern Cape Ultra Deep Block (NCUD) in the Orange Basin.

Water depths in the region range between 2,500 metres (8,200 ft) and 3,200 metres (10,500 ft).

"All the buzz from Namibia is extending into South Africa," said Jamie McGreevy, lead analyst for Namibia and South Africa at Welligence Energy Analytics.

"If you consider the scale of the opportunity as well as the size of giant discoveries in Namibia, it is really the big prize that they going after and that can be transformational for South Africa," he told Reuters.

Mounting environmental pressures, including a raft of court actions to halt drilling, and cumbersome bureaucracy has stifled South Africa's ambitions to develop its nascent oil and gas potential as companies flock to neighbouring Namibia.

The latest blow to South African hopes came earlier in July when TotalEnergies signalled its intention to withdraw from its position in Block 11B/12B on the southern coast over market challenges.

The offshore block holds the significant Brulpadda and Luiperd gas condensate discoveries, seen as vital to South Africa's goal of becoming energy independent.

Released for public comment until Aug. 8, SLR's draft environmental social impact assessment is the first step ahead of more detailed studies into the impact exploration and potential oil spills may have on the environment.

Shell, which com missioned SLR to conduct the study, did not immediately respond to a request for comment.

(Reuters - Reporting by Wendell Roelf; Editing by Andrew Heavens, Jason Neely and Helen Popper)

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