Karoo fracking 'game-changer' may be a non-starter

Two State of the Nation speeches ago President Jacob Zuma said hydraulic fracturing, or fracking, for shale gas in the Karoo would be a ''game-changer'' for the region and the broader economy.

''Having evaluated the risks and opportunities, the final regulations will be released soon and will be followed by the processing and granting of licences,'' he said.

It has since emerged that Royal Dutch Shell is withdrawing its top shale-gas executive and other experts from South Africa, partly because of the dramatic slump in the oil price but also because the company had failed to secure an exploration licence for the Karoo Basin after six years of trying. It also cited uncertainty about pending legislation and technical regulations.

Yesterday Shell South Africa's chairman Bonang Mohale said the company was retreating to a "low-cost holding position'' with respect to shale gas exploration and, for Shell to resume operations, the oil price would have to recover and South Africa would have to present "excellent commercial terms".

The last point is one that the Zuma administration would do well to chew over.

The Mineral and Petroleum Resources Development Bill, which was rushed through parliament before last year's election, and which has since been referred back, contains some manifestly anti-business provisions.

Chief among them is the stipulation that the state gets a 20% free stake in new oil and gas projects before the companies launching them have had a chance to recoup their costs. This stake can be significantly increased at "an agreed price'' once the project is profitable.

The oil price will recover but Shell's stance, and that of US exploration company Anadarco Petroleum, which halted shale-gas exploration in South Africa last year, suggests that, unless we get our act together, billions in investment and thousands of precious jobs will be lost.

With fracking, as with all business, Pretoria faces a stark choice: make the country attractive as an investment destination or Zuma's ''game-changer'' will be a non-starter.