JOHANNESBURG - South Africa's national oil company PetroSA and India's largest private oil producer, Cairn India Ltd., said Thursday that the two signed an agreement to explore for oil and gas off the coast of South Africa.
The two companies said they signed a farm-in agreement, for an undisclosed amount, to explore in the Orange Basin Block 1 on the west coast of South Africa.
Cairn India will hold a 60% interest in the block, through a wholly owned South African subsidiary, and will be the operator, with PetroSA holding the remaining interest. The block covers an area of 19,922 square kilometers.
The Orange Basin, offshore South Africa near the Namibian border, has attracted interest from other companies, but is underexplored. Royal Dutch Shell PLC and Anadarko Petroleum Corp., which is developing gas deposits off the coast of Mozambique, are exploring for oil and gas in the Orange Basin.
South Africa relies on oil and gas imports for about 60% of its energy needs so is trying to boost domestic production.
PetroSA has been teaming up with international companies to develop other aspects of the energy infrastructure. In May, the South African company said it will build a refinery that could process several hundred thousand barrels of oil a day and cost several billion dollars to construct in partnership with China Petroleum and Chemical Corp., known as Sinopec.
The exploration agreement Thursday marks Cairn's first move outside of India and Sri Lanka, it said.
"This is an important first step for the company's growth beyond the Indian subcontinent," said P. Elango, Cairn India director for strategy, who said the company wants to build a bigger business in the region.
The Vedanta Resources PLC currently holds 58.85% of the company, while U.K.-based Cairn Energy PLC has a 18.28% stake in it.
Copyright (c) 2012 Dow Jones & Company, Inc.
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