* Fracking moratorium lifted last year
* S.Africa believed to have vast shale gas deposits
* Minister says fracking vital for economy, energy needs
By Ed Stoddard
JOHANNESBURG, Oct 10 (Reuters) - South Africa's cabinet onThursday proposed new regulations to govern exploration forshale gas, an important step in opening up an industry thatcould provide new energy supplies for Africa's largest economy.
South Africa last year lifted a moratorium on shale gasexploration in its Karoo region, where fracking might tap whatis believed to be some of the world's biggest reserves of theenergy source.
The sparsely populated Karoo is renowned for its ruggedscenery and is home to species such as the mountain zebra andriverine rabbit, one of the rarest mammals in the world.
The government signaled on Thursday it was keen to startexploiting the resource.
"Not only does the potential of shale gas exploration andexploitation provide an opportunity for us to begin productionof our own fuel, but it also marks the beginning of thereindustrialization of the South African economy," MineralResources Minister Susan Shabangu said in a statement.
"By embarking on this process presented by hydraulicfracturing for the production of shale gas, we bring the countrya step closer to the achievement of our objectives," she said.
Companies showing an interest in exploring South Africa'sshale gas potential include Royal Dutch Shell.
Shabangu said the proposed technical regulations providedfor the protection of water resources, an issue that has raisedconcern among conservationists as the Karoo is semi-arid.
Environmentalists also say water supplies could be pollutedby fracking, in which pressurised water, chemicals and sand arepumped underground to release gas trapped in shale formations.
The proposed regulations include measures to protectwildlife in the region as well as its rich fossil deposits.
The prospect of energy exploration in the Karoo has raisedalarm bells in South Africa, which has a large network ofconservation groups and a history of green activism.
But South Africa also wants to reduce its heavy dependenceon coal usage, which emits greenhouse gases linked to climatechange. Close to 90 percent of the country's power supply comesfrom coal-fueled plants.
Developing just a 10th of South Africa's estimated resourcescould boost the economy by 200 billion rand ($19.56 billion) ayear and create 700,000 jobs, a study, commissioned by Shell andcarried out by research firm Econometrix, said last year.
The proposed regulations have been published in SouthAfrica's government gazette and the public has 30 days in whichto comment on them.
