S.Africa imposes "fracking" moratorium in Karoo

JOHANNESBURG (Reuters) - South Africa’s cabinet placed a moratorium on Thursday on oil and gas exploration licenses in the semi-arid Karoo region, where the controversial shale extraction technique of “fracking” might be deployed.

The Karoo is a vast and ecologically sensitive region that is high on the radar screen of conservationists.

“Cabinet has endorsed the decision by the department of minerals to invoke a moratorium on licenses in the Karoo, where fracking is proposed,” the government said in a statement.

Petrochemical group Sasol (SOLJ.J), Anglo American (AAL.L) and Falcon Oil and Gas (FO.V) are among those eyeing shale gas in the region. Royal Dutch Shell (RDSa.L) is leading the pack with exploration rights to 90,000 sq km (34,750 sq miles).

“We have noted the South African cabinet’s endorsement of the decision of the department of minerals, and we will seek clarity from the department on the full implications,” a Shell spokesperson told Reuters.

Karoo farmers and conservationists are concerned about the possible impact of hydraulic fracturing or “fracking,” in which drillers blast millions of liters of water, sand and chemicals at high pressure into underground rock to create cracks for gas and oil to escape.

“The department made a decision a while back, and cabinet has endorsed the decision,” cabinet spokesperson Jimmy Manyi said.

He told Reuters the department of minerals and resources (DMR) would lead a task team to explore the implications of fracking, which would include the departments of trade and industry as well as science and technology.

“The multi-departmental task team is going to make sure that all angles are covered in terms of government getting proper information about the implication of fracking,” he said.

Manyi did not give a timeline for when the research would be concluded but said the moratorium would remain in place until “there is conclusive evidence that there will be no unintended consequences on the environment.”

Applications already submitted will have to wait.

“There will be nothing that will be approved until the research is carried out, concluded and pronounced on,” Manyi said.

The Karoo region, home to rare species such as the mountain zebra and riverine rabbit, may hold vast deposits of natural gas in shale rock deep underground.

Once unobtainable, such reserves can now be exploited with fracking and could serve as a badly needed energy source for Africa’s largest economy, which relies heavily on coal.

The U.S. Environmental Protection Agency (EPA) is also currently studying the impacts of fracking on drinking water. Initial results are scheduled for release in 2012.

Editing by Ed Stoddard and Jane Baird