CHALLENGER Energy said its interest in exploring for shale gas in South Africa's Karoo district was "undiminished" and that it had recently submitted its environmental report in support of its exploration permit application.

This follows confirmation earlier this week that Shell would slow exploration for shale gas in the country following a group wide assessment of its most promising exploration projects - a development which has been construed as Shell's frustration with the lack of regulatory progress in South Africa.

"The interest of Challenger and its South African subsidiary, Bundu Gas and Oil Exploration, in the potential of Karoo shale gas is undiminished," said Challenger MD Robert Willes.

"Recently, we reported completion of a constructive public participation process and we have just resubmitted our amended environmental management programme (EMPR) to the regulator in support of our application for an exploration permit," he said.

"We look forward to an outcome to this application in the coming months," said Willes, adding that the company believed that if found in economically exploitable quantities, shale gas could be "a major contributor to South Africa's energy mix".

The South African government said in October last year that it would process Challenger Energy's exploration licence application - one of a batch to be granted for the ecologically sensitive region.

However, the recall of the Mineral & Petroleum Resources Amendment bill for further discussion, and uncertainty as to whether parts of the MPRDA would be changed or put into separate legisation is believed to have frustrated Shell.

"From that perspective, we trust that the restarting of the processing of exploration rights applications is indicative of the seriousness of intent on the part of government to resolve the proposed amendments to the MPRDA in a manner that will be fair and reasonable to all parties," said Willes.

In terms of the amendments, the South African government was to receive a 20% free-carry on oil and gas projects, an element of the legislation that critics said would deter investment in the sector.