* S.Africa keen to develop shale gas industry
* Sasol wants to invest in the sector
By Ed Stoddard
JOHANNESBURG, March 10 (Reuters) - South Africanpetrochemicals group Sasol Ltd is keen to invest in adomestic shale industry once it gets off the ground, its chiefexecutive said, in a potential challenge to oil major RoyalDutch Shell.
South Africa's cabinet proposed new regulations to governexploration for shale gas late last year after it lifted a 2012moratorium on the activity in the central Karoo region.
Fracking in the region might tap what is believed to be someof the world's biggest reserves of the energy source and the government wants to develop an industry that it sees as apotential game-changer in Africa's largest economy.
"I am very excited because of the technologies we can bringto the table. We've got shale gas upstream experience in BritishColumbia," Sasol Chief Executive David Constable said on Monday.
"We want to get involved and participate and monetize thatgas in country with gas to liquid, gas to power, gas tochemicals," he said after the group posted a 26 percent rise inhalf-year earnings.
Shell has applied for an exploration licence and once all ofthe new regulations are in place it is expected to be near thefront of the line.
Constable said Sasol wanted to take part. "We are reallyinterested in what is going in the Shell block and would love tofarm in or take a piece of it. Shell is issuing profit warningsand pulling back capex right now," he said.
Shell said in January that it planned to cut capitalspending to $37 billion this year from $46 billion in 2013,following a profit warning.
Shell was not immediately available to comment on Monday.
Constable said the government should take Shell's strategyinto account.
South Africa's Public Investment Corporation (PIC), which isSasol's biggest shareholder with a 13 percent stake in thecompany and manages 1.4 trillion rand ($130.3 billion) in civilservant retirement funds, has also said it wants a big slice ofthe shale pie.
Fracking involves pumping pressurised water, chemicals andsand underground to release gas trapped in shale formations andthe prospect of it occurring in the semi-arid andsparsely-populated Karoo region, known for its big skies andscenery, has raised concerns anong conservationists.
Constable said Sasol's experience in British Columbia wouldenable the company to carry out the process "in anenvironmentally friendly fashion."
EARNINGS, DIVIDEND UP
Sasol said headline earnings per share (EPS) for the sixmonths to the end of December increased 26 percent to 30.19rand, in line with the group's trading update last month.
Earnings were lifted by a weaker rand currency and higherchemical prices.
Headline EPS is the primary measure of profit in SouthAfrica and strips out one-off items.
Operating profit was hit by one-off items including a 5.3billion rand impairment on Canadian shale assets prompted inpart by poor prices in the North American gas market.
Sasol said it expected a slight strengthening in the rand,which would hurt earnings for the rest of the financial year.
The company raised its dividend by 40 percent to 8 rand pershare, a record for a half-year payout.
