South Africa on Friday said it was lifting a freeze on shale gas exploration in a move condemned by environmentalists who fear that controversial fracking will pollute scarce water sources.

The country's cabinet approved the lifting of a moratorium set down last year on applications to explore for gas while a team probed the effects of hydraulic fracturing drilling known as fracking.

"The moratorium has been lifted because cabinet is satisfied that with the information now at hand...they will be able to say this is how these issues are going to be mitigated," Minister in the Presidency Collins Chabane told media.

Anglo-Dutch energy giant Shell is among several companies wanting to explore for commercially feasible shale gas in the vast semi-desert Karoo which may have one of the largest untapped deposits in the world.

The use of fracking, which blasts a mix of water, sand and chemicals into hard rock to release gas locked inside, has sparked a backlash over environmental fears of water contamination.

"Fracking is just another bad fossil fuel dead end," said Greenpeace.

"Greenpeace condemns the lifting of the moratorium on fracking, particularly given the potential impacts on scarce water resources and substantial renewable energy alternatives."

Shell wants to explore in area of around 90,000 square kilometres, while another company Falcon Oil & Gas is eyeing an area that is one and a half times the size of the famed Kruger National Park wildlife reserve.

A find of commercially exploitable deposits has been billed as a possible answer to easing coal-hungry South Africa's energy needs as it moves from heavy polluting electricity production towards greener sources.

"If it can make the shale gas produce commercial quantities of gas in an environmental way, then this could be a potential game changer for the country because this could provide security of supply of energy," Jan Willem Eggink, Shell South Africa general manager of upstream operations told AFP.

"And in addition to that, this can produce a lot of revenue for the state and also a significant amount of jobs."

Shell has said it would spend $200 million (156 million euro) for the first exploration phase of six wells if granted a licence to drill.

"If we have some encouragement, we will do more exploration wells and then we will easily spend a billion dollars or more," said Eggink, who was confident gas could be extracted in an environmentally safe way.

"We will only have a better feel what the amount of gas could be if we have drilled some exploration wells," he added.

The United States Energy Information Administration estimates that the country has 485 trillion cubic feet of technically recoverable gas, which would make it the world's fifth biggest shale gas field.

Such a find would be equal to 400 years of crude oil imports, a Shell-funded study by local firm Econometrix said.

Working with more conservative estimates, Econometrix used figures of 20 to 50 trillion cubic feet of gas which was projected to create 290,000 to 700,000 jobs.

The cabinet decision was aired after a three day meeting but the fracking study report was not made public on Friday.

"We also feel that the study that they used to make their decision should be made public," said Ferrial Adam, Greenpeace Africa climate and energy campaigner told AFP.

"Essentially, what it means is that our government has sent a signal to the international community that it has made in our view a hasty and ill-informed decision about a vastly unpopular technology," Jonathan Deal of the Treasure the Karoo Action Group told the private eNCA news channel.