(Adds Shell comment, details, background)
CAPE TOWN, March 8 (Reuters) - South Africa will give thegreen light in the next 12 months to companies looking toexplore for shale gas under the semi-arid Karoo basin, thegovernment said on Tuesday, more than six years after firms suchas Shell applied for licences.
Royal Dutch Shell, Falcon Oil & Gas andBundu Gas & Oil are among five companies which have applied forexploration licences being reviewed by South Africa's PetroleumAgency, the regulator said on Tuesday.
The Petroleum Agency will submit its recommendations to thegovernment by early May. The ministry of mineral resources willmake the final decision on granting licenses.
"One area of real opportunity for South Africa is theexploration of shale gas," a statement from cabinet ministersresponsible for the economy said.
"Exploration activities are scheduled to commence in thenext financial year. This will lead to excellent prospects forbeneficiation and add value to our mineral wealth."
Shell said last March it was pulling back from shale gasprojects in South Africa due to lower energy prices and delaysin obtaining exploration licences.
The energy major, however, said on Tuesday it could stillhave an interest in exploring in the Karoo.
"Should attractive commercial terms be put in place, theKaroo project could compete favourably within Shell's globaltight/shale gas and oil portfolio," the company told Reuters.
The Karoo region is believed to hold up to 390 trillioncubic feet of technically recoverable gas reserves.
A study commissioned by Shell said extracting 50 trillioncubic feet or 12.8 percent of potential reserves, would add $20billion or 0.5 percent of GDP to the South African economy everyyear for 25 years and create 700,000 jobs.
Green groups and land owners in the Karoo, a vastsemi-desert wilderness stretching across the heart of SouthAfrica, have argued that exploring for shale by fracking, orhydraulic fracturing, would cause huge environmental damage.
Pretoria has been accused of dragging its heels infinalising policy for gas and oil exploration. (Reporting by Wendell Roelf; Additional reporting by EdCropley; Writing by Joe Brock, editing by David Evans)
