State oil company PetroSA and Indian oil and gas exploration company Cairn India Group signed a farm-in agreement for crude oil and natural gas exploration in the Orange Basin on the west coast of South Africa in Cape Town on Thursday.
The agreement is for the offshore area on the north western border between South Africa and Namibia, which covers an area of 19 922 square kilometres.
It is currently in the initial stages of exploration after PetroSA acquired a 1500 square kilometre three-dimensional seismic survey in 2009.
The Orange Basin is an emerging hydrocarbon province, with the potential of oil and gas discoveries, and Block 1 will serve as an anchor exploration asset in South Africa, according to PetroSA.
Cairn India will hold a 60% interest in the block, through its wholly-owned South African subsidiary, and will be the operator, with PetroSA holding the remaining interest.
This falls in line with PetroSA's ambitions to grow into a leading integrated African energy company.
"The company seeks to nurture strategic alliances with experienced international companies across the oil and gas value chain. The partnership with Cairn India starts an exciting new chapter and represents another positive development in that direction," the company said in a statement.
"We are delighted to join hands with one of Asia's most successful exploration companies. Cairn India brings with it extensive geo-technical and operating capabilities that will combine very well with our experience and understanding of the region," said PetroSA vice president for new ventures, Everton September.
"We have a shared mindset, and together are extremely well placed to realise the full potential of Block 1."
Cairn India Director for Strategy, P Elango, said his company was pleased to partner with PetroSA. "This is an important first step for the company's growth beyond the Indian subcontinent."
"We see an attractive opportunity to leverage our capabilities in a rapidly emerging area and aspire to build a wider business in the region," he said.