Document shows that Shell has been approved as the majority partner of PetroSA in the block offshore South Africa.

A document obtained by revealed that South Africa's national oil company PetroSA has approved the deal for Shell Offshore to receive a 60% share in Block 2C off its west coast.

The agreement, if it is successfully concluded, will increase Shell's exposure in the Orange Basin. This area has been dubbed one of the most sought-after exploration zones around the globe after the major oil discoveries made in Namibia.

In a short note, PetroSA's priority programs stated that the company approved the farm-in agreement to allow Shell Offshore a 60% stake "with Shell committed to a $25 million sign-up bonus and full cost-carry (of approximately $135-$150 millions) for three wells".

The CEO of PetroSA, who holds 100% of Block 2C pending the transaction, did not respond immediately to a comment request.

Shell's spokesperson stated that commercial sensitivity prevented commenting on "specific opportunities". However, the company is "continuously evaluating portfolio options in order to grow our business".

SHELL ALREADY WANTS TO DRILL

Shell has already announced its intention to explore the west coast of South Africa. In July, Shell was granted an environmental permit to drill five deep water wells at the Northern Cape Ultra Deep Block located in the Orange Basin.

The exact date of the first drilling has yet to be announced.

Shell filed an appeal in October against a High Court decision that blocked exploration of the Block 5/6/7 offshore west coast, due to a number court cases brought forward by environmental groups. Shell's application was made as a result of a delay caused by a number court cases.

PetroSA, which was this year incorporated into the South African National Petroleum Company (SANPC), holds many assets. These include offshore acreage, and a Mossel Bay gas-to liquid plant in the Western Cape that is currently being maintained.

The national regulator PASA has said that it is unable to comment on stake transfers as it does not yet have a request to transfer rights on Block 2C. (Reporting and editing by Barbara Lewis; Wendell Roelf)

(source: Reuters)