South Africa's national oil company PetroSA and Rosgeo, the geological exploration company of the Russian Federation, have signed an agreement on a $400mn oil and gas development project in South Africa, the companies said on September 4. 

The agreement is a major step towards the search for oil and gas in South Africa, which remains very strategic for the country’s energy security and has the potential to bring significant revenues to the country. 

The agreement, which was signed during the annual Brics Summit in China, involves the development of the exploration areas of blocks 9 and 11a off the south coast of South Africa. 

Within the framework of the agreement, Rosgeo is supposed to conduct a considerable volume of geological exploration work. Rosgeo will carry out more than 4,000km2 of 3D seismic operations and over 13,000 km of gravity-magnetic exploration works and the drilling of exploratory wells, the statement said. 

The project envisages the extraction of up to 4mn cubic metres of gas daily, to be delivered to PetroSA's Mossel Bay refinery, and the estimated value of the investment is about $400mn. 

According to Roman Panov, Rosgeo CEO, under the framework of the contract, Rosgeo will use advanced technologies that include 3D exploratory works, and modern seismic and drilling vessels. "The signed agreement is aimed at developing bilateral relations and will strengthen Rosgeo’s presence in the African market," he added.

Meanwhile, the chairman of South Africa's Central Energy Fund, Luvo Makasi, commented that the country's oil and gas potential "remains largely unexplored".

"This exploration effort presents significant upside to both the country and PetroSA. The upside for PetroSA is the possible expansion of our depleting gas resources. Discovery of hydrocarbons on our shores has the potential to bring significant revenues to the country and prove the country’s oil and gas prospectivity,” Makasi said.