South Africa’s PetroSA has facilitated a deal giving Shell Offshore a 60% stake in Block 2C off the west coast. This represents a strategic shift in how the country approaches upstream energy, how it seeks investment, and how it plans to revive a struggling national oil company and tap into one of the world’s most exciting offshore basins.
Under the deal, Shell will pay a $25 million signing bonus and fully fund three offshore wells at an estimated cost of $135–$150 million. PetroSA will keep a 40% carried interest once regulatory approvals are completed.
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South Africa’s approval of the PetroSA–Shell agreement comes at a time of rising energy insecurity, with the country producing far less oil than it consumes and relying heavily on imports from the Middle East and West Africa. By opening Block 2C to major offshore exploration, South Africa is making a strategic push to reduce long-term dependence on foreign crude while strengthening its economic foundations. If new oil or gas is discovered, the benefits could be substantial: stronger GDP growth, improved trade balances that support the rand, thousands of new skilled jobs, higher tax and royalty revenues, a more financially resilient SANPC, and reduced fuel-import costs. These gains would also feed into broader industrialisation efforts and enhance regional energy integration at a time when the economy, valued at $426 billion and growing at just 1.1–1.6%, urgently needs new engines of growth.
Block 2C sits within the wider Orange Basin, a geological zone that has already produced major discoveries offshore Namibia. With the Venus and Graff finds proving the basin’s high potential, South Africa is eager to participate in what is shaping up to be one of the world’s most important new petroleum frontiers.
This deal also fits directly into South Africa’s newly launched national oil structure. In 2025, the government created the South African National Petroleum Company (SANPC), consolidating PetroSA, iGas, and the Strategic Fuel Fund. The strategy aims to build a stronger, integrated national energy company capable of attracting global investors and participating competitively in upstream markets.
For Shell, the attraction is clear. The Orange Basin is emerging as a deep-water hotspot with large, long-life resources. Block 2C lies along the same structural trends as Namibia’s discoveries, and the company is working to position itself as a major player across the basin. The block aligns with Shell’s push for profitable deep-water assets with strong long-term returns.
Once approved, Shell will take over as operator of Block 2C, carry PetroSA through exploration, and lead development if commercial deposits are found. PetroSA will benefit from access to world-class technical expertise, lowered financial risk, and a share of potential long-term revenue.
The deal emerges against the backdrop of South Africa’s troubled oil landscape. Refining capacity has dwindled, imports dominate the market, and energy costs are vulnerable to currency fluctuations and global supply disruptions. Upstream success could improve energy security, diversify supply, and bring greater stability to a stressed system.
Economically, new oil and gas finds could strengthen GDP, create jobs, generate tax and royalty income, support the rand, and revive critical infrastructure such as the Mossel Bay GTL refinery. Even moderate discoveries would provide much-needed fiscal relief and support SANPC’s efforts to rebuild national capacity.
Challenges remain as offshore exploration in South Africa has repeatedly faced environmental litigation, long permitting processes, and community opposition. Global energy markets are also shifting toward lower-carbon strategies, which could influence how any discoveries are developed.
Despite the risks, the PetroSA–Shell partnership marks a significant repositioning. It reflects South Africa’s determination to join the Orange Basin boom, stabilise its energy future, and re-establish a capable national oil company. Whether or not Block 2C yields commercial volumes, the deal signals a strategic reset with long-term implications for the country’s economic and energy outlook.
