The South African state-owned company PetroSA recently approved a farm-in agreement that gives Shell a 60 per cent operating stake in the Orange Basin’s Block 2C.
According to sources, if given the green light, the deal will fortify the UK oil giant’s position in what has become an increasingly strategic location for the industry.
The Orange Basin extends across the Namibia and South Africa maritime border. It is regarded as being among the world’s leading exploration areas, following several significant discoveries by Shell Offshore and TotalEnergies in Namibia. Once finalised, the proposed deal would be Shell’s most substantial growth yet in offshore South Africa.
A global operator, Shell currently conducts activities in more than 70 countries, while its lubricants are sold in over 100. Lubricant products available from Shell range from oil and grease for conventional consumers to more specialist solutions like cutting fluid, slideway oil and vacuum pump fluid.
Under the new deal, Shell will pay a signing bonus of 25 million and finance $135 to $150 million, covering the cost of a three-well exploration programme. This will take PetroSA through its first drilling stage. While PetroSA presently holds 100 per cent of Block 2C, to complete the agreement and transfer interest to Shell, regulatory approval is necessary from the Petroleum Agency of South Africa.
The agreement arrives as Shell ramps up its ambitions on the western offshore acreage of South Africa. Back in July, it was granted environmental authorisation to drill multiple ultra-deep-water wells sited at the Northern Cape.
