By Devon Maylie
JOHANNESBURG--Chevron Corp. (CVX) has joined the search for oil
and gas in South Africa's Karoo, teaming up with Dublin-based
Falcon Oil & Gas Ltd. (FO.V)
The two companies said this week that Falcon and Chevron's South
Africa unit entered an agreement to jointly explore for
hydrocarbons in the Karoo basin. Chevron late Thursday declined to
provide further details on the agreement.
New gas and oil discoveries across Africa have attracted a rush
of international players to come explore. In neighboring
Mozambique, Anadarko Petroleum Corp. (APC) and Italy's Eni SpA (E,
ENI.MI) have made gas discoveries.
In South Africa, the gas exploration in the Karoo was held up
while the government decided on a regulatory system for the
controversial exploration method companies said they would need to
use.
In September, South Africa lifted a temporary halt on shale-gas
exploration in the Karoo, an isolated, nature-rich region.
Companies said production will still be many years away.
South Africa, estimated to hold the world's fifth-largest
reserves of shale gas according to estimates by the U.S. Energy
Information Administration, last year imposed a moratorium on
hydraulic fracturing--a procedure known as fracking--while it took
a closer look at the repercussions of letting companies like Royal
Dutch Shell PLC use the controversial technique in the Karoo, an
arid region home to a variety of desert mammals and plant
species.
The technique has helped unlock gas reserves trapped in
underground shale rock in the U.S. with great success, but critics
say the technique risks damage to the environment.
Falcon currently has a technical permit to study a
7.4-million-acre area with the exclusive right to convert that
permit to an exploration permit.
Chevron said Tuesday that it will make a cash payment of up to
$1 million to Falcon to contribute toward past costs. The two
companies will now work together to secure an exploration
permit.
"[The] agreement with Chevron is a major step forward towards
realizing the full potential of our already significant acreage
position in the Karoo," said Falcon chief executive Philip
O'Quigley.
Write to Devon Maylie at devon.maylie@dowjones.com
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