Anglo-Dutch company Shell has reached an agreement to acquire a 60% stake in Block 2C, located in the Orange Basin off the coast of South Africa. The operation involves the state-owned Petroleum Oil and Gas Corporation of South Africa (PetroSA) and marks a gradual recovery in oil exploration activities in the region, following several years of legal deadlock.
Shell plans to invest up to $150mn in drilling operations
Under the terms of the deal, Shell will pay PetroSA a $25mn signing bonus and will assume all initial work costs on the block. This includes drilling three exploration wells, with a projected budget ranging from $135mn to $150mn. These drilling operations are part of a broader strategy to develop the Orange Basin, a cross-border area with Namibia, where significant discoveries have recently been made.
Shell is reinforcing its presence in the region, after securing authorisation in July to drill five wells in the Northern Cape Ultra Deep Block, also located within the Orange Basin. However, its other operations in Block 5/6/7 remain suspended due to a court ruling currently under appeal.
Operation still subject to regulatory approval
Finalisation of the transaction is subject to approval by the Petroleum Agency South Africa (PASA), the national oil and gas regulator. As of now, the formal transfer request has not yet been submitted to the agency. South Africa’s legal framework remains affected by disputes related to offshore oil projects, particularly following the 2022 suspension of a seismic survey campaign ordered by the High Court in Makhanda.
A 2024 ruling by the Supreme Court of Appeal partially accepted Shell’s arguments, but the case remains pending before the Constitutional Court. These uncertainties continue to impact the legal security of foreign investments in the country’s offshore exploration sector, despite growing interest in the energy potential of the basin shared with Namibia.
