Falcon Oil & Gas, a Dublin-based exploration company chaired by industry veteran John Craven, expects to enter negotiations with the South African government on terms for a licence to explore for shale gas in the autumn.

Falcon chief executive Philip O’Quigley said he hoped to start talks with government officials for a three- or five-year exploration licence in the Karoo Basin in September or October.

“I expect that negotiations will last about three months,” he said.

Falcon, which already has a technical permit to assess the Karoo area, has been notified by authorities in South Africa that its application for a full exploration licence is being processed.

Negotiations

The negotiations will cover issues such a programme of works, the length of the licence period, fiscal terms and the amount of capital Falcon must be able to tap into, if required.

Mr O’Quigley said he was confident that AIM-listed Falcon could wrap up the negotiations this year, after which it was likely to seek a farm-out deal with a bigger operator to fund drilling in return for a stake in the licence.

Falcon concluded a similar farm-out deal worth 200 million Australian dollars (€137 million) last year for its Beetaloo fracking project in Australia with larger players Origin and Sasol.