CAPE TOWN, May 7 (Reuters) - South Africa will gazette finalregulations for shale gas exploration by June, two years afterreleasing draft rules and as companies reconsider investmentsdue to volatile oil prices and delays in awarding licenses.
In March, Royal Dutch Shell said it was pullingback from its shale projects in South Africa's semi-arid Karooregion which is believed to hold up to 390 trillion cubic feetof technically recoverable reserves.
"We have finalised the regulations... It would be gazettedin a month's time," Ngoako Ramatlhodi, minister of mineralresources, told reporters before his budget speech toparliament.
Shell had applied for an exploration license covering morethan 95,000 square km, almost a quarter of the Karoo.
A study commissioned by the company said extracting 50trillion cubic feet or 12.8 percent of potential reserves, wouldadd $20 billion or 0.5 percent of GDP to the South Africaneconomy every year for 25 years and create 700,000 jobs.
Besides Shell, Falcon Oil and Gas in partnership withChevron, and Bundu Gas have applied for explorationlicenses.
But environmentalists and land owners in the Karoo, situatedin the heart of South Africa, have argued that exploring forshale by fracking, or hydraulic fracturing, would cause hugeenvironmental damage in the water-scarce region.
"We have taken into consideration the issues of water and regulations are going to address this sufficiently, providingproper guidance on how to undertake hydraulic fracturing," saidThibedi Ramontja, director general in the department of mineralresources.
It would take companies about three years of exploration todetermine if the Karoo reserves were commercially viable, beforemoving into possible production, he added. (Reporting by Wendell Roelf; Editing by Ruth Pitchford)