South Africa will process applications for shale gas exploration but hold off on controversial fracking drilling while new rules are drafted, the mines minister said Tuesday.

The country's cabinet last week lifted a freeze on shale gas exploration following a report from a study which also pointed to a "moderately optimistic" forecast of nearly one trillion rands ($122 billion, 95 billion euros) worth of gas.

"The drilling will happen because it will have to establish whether there is anything or not," Mining Minister Susan Shabangu told reporters, giving no time frames as to when exploration in the semi-desert Karoo region would begin.

"But what we have agreed as cabinet is your actual (hydraulic) fracturing is the one which cannot be done now... it will come later but we think drilling will happen so as to establish the potential."

The Karoo region has been tipped as potentially one of the world's largest untapped shale fields.

However hydraulic fracturing, or fracking, has been slammed by environmentalists over water pollution fears as the process blasts water, sand and chemicals into hard rock to release natural gas.

The process, which allows recovery of gas that previously could not be tapped, has led to a boom in production in the United States.

Exploration for gas uses standard drilling.

The fracking report said a yield of 30 trillion cubic feet would generate, at current pricing and currency exchange values, nearly one trillion rands in gross sale values. Millions of rands in tax and royalties are also expected.

Interested companies affected by the government's moratorium imposed in February 2011 include energy giant Shell.

"It's only now I can say we'll start considering those applications," said Shabangu about the licence bids.

"How long it takes, it depends on the compliance of those applications given that we're also putting some new conditions on that process."

The report also recommended the setting up of a monitoring committee and augmenting of the current regulatory framework, which could take six to 12 months.

It suggested that once all recommendations are in place, fracking should be authorised "under strict supervision of the monitoring committee" and be halted if there were negative outcomes.

"We are a water scarce country. If the process is such that there is a threat to water in South Africa, we will have to stop the process," said Shabangu.

One of the conditions before fracking takes place is setting up ways for astronomy projects and shale gas developments to co-exist, with the Karoo the co-host of the future Square Kilometre Array (SKA) mega radio telescope.

"The matter of SKA, if it is clear... there is going to be an extremely negative impact on that and they cannot mitigate it, we may have to halt the process," said Shabangu.