Shell to Lead Offshore Drilling in South Africa’s Block 2C

Pretoria, December 8, 2025 – South Africa’s legacy national oil company, PetroSA, has approved a landmark agreement granting Shell Offshore a 60 percent working interest in Block 2C, located off the country’s west coast in the promising Orange Basin. The deal marks a major shift in offshore exploration strategy and significantly expands Shell’s footprint in one of Africa’s hottest potential hydrocarbon regions.

Under the farmin arrangement, Shell will pay a USD 25 million signing bonus to PetroSA, and cover the full cost of drilling three exploratory wells — estimated between USD 135 million and USD 150 million. If completed, the transfer will give Shell operational control over the licence, while PetroSA retains a 40 percent interest, pending regulatory approval from the Petroleum Agency of South Africa (PASA).

Orange Basin at the Centre of Regional Energy Ambitions

The Orange Basin — which stretches across maritime borders of Namibia and South Africa — has risen to prominence as one of the world’s most coveted frontier exploration zones following a series of major discoveries offshore Namibia. The new agreement positions South Africa to ride the wave of regional investor interest and potentially transform its energy outlook.

Shell already holds environmental approvals to drill up to five deepwater wells in the Northern Cape Ultra-Deep Block, another part of the Orange Basin under South African jurisdiction. The firm, however, has not yet provided a timeline for the start of drilling.

Regulatory Hurdles and Environmental Scrutiny Remain

Despite the breakthrough with Block 2C, the broader offshore drilling push has faced legal and environmental resistance. In August 2025, a court annulled the environmental authorization for a nearby offshore block (Block 5/6/7), jointly held by Shell and TotalEnergies, citing inadequate assessment of spill risks and lack of climate-change considerations.

Shell has since appealed that decision. However, its ongoing ventures — including the Block 2C deal — will likely draw close scrutiny from regulators, environmental organisations, and coastal communities before any drilling proceeds.

What This Deal Means for South Africa

The agreement with Shell could deliver several significant benefits for South Africa’s energy sector. If exploration proves successful, the deal could reduce import dependency, strengthen energy security, and attract new upstream investment — all while generating employment in offshore operations and support services.

For PetroSA, the farmin deal enables the company to share geological and financial risk with a global major, while retaining a substantial stake and potential upside from future production.

For Shell, the move represents a strategic bet on the Orange Basin’s potential, offering access to deepwater resources at a time when global demand for oil remains substantial even as energy transition debates intensify.

What Comes Next

The agreement must still clear regulatory review by the Petroleum Agency of South Africa before the interest transfer becomes official. Should approval come through, Shell is expected to proceed with the three-well drilling programme as soon as logistical and environmental clearances are finalised.

Stakeholders — including government regulators, environmental watchdogs, and local communities — will be watching closely. The outcome will likely shape the future of offshore oil exploration along South Africa’s west coast, and signal whether the Orange Basin will deliver on its promise.