Total to ditch SA offshore gas finds, choosing Namibia instead

BLOOMBERG
TotalEnergies plans to exit its discoveries of gas-condensate off the tip of South Africa to prioritise exploration in other areas closer to Namibia, according to people familiar with the matter.

The French giant braved one of the fastest ocean currents in the world to drill off South Africa’s coast, spending at least US$400 million to find an estimated one billion barrels equivalent of light liquid hydrocarbon at the Brulpadda field in 2019. It had further success at the Luiperd well the following year, but neither discovery has progressed to development.

TotalEnergies plans to relinquish the licence for Block 11B/12B because it doubts whether the complex deep-water finds can be made commercially viable, given South Africa’s small gas market, said one of the people, who asked not to be named as the information isn’t public. The company will concentrate instead on exploring the Orange Basin, located further north on the Atlantic coast of South Africa near promising oil discoveries in Namibian waters, the source said.

TotalEnergies didn’t immediately respond to requests for comment.

An exit from the discoveries would be a blow to South Africa, which lacks domestic sources of oil and gas. Potential production from the fields had been earmarked in plans to help the country move away from a dependence on coal and provide feedstock for state-owned PetroSA’s 45 000-barrel-a-day gas-to-liquids plant that depends on other depleted fields nearby.

Africa Energy Corporation, which has a 20% stake in the discoveries, said in a statement on Monday that it will withdraw from the joint operating agreement with its partners having been advised that TotalEnergies’ local unit "is currently reviewing its options".

A spokesperson for Petroleum Agency South Africa wasn’t immediately able to comment.

South Africa has struggled to bring oil and gas developments onstream in a timely manner amid legislative uncertainty. The passage of a new hydrocarbon law awaited by explorers has dragged on for years. At the same time, environmental groups have stepped up campaigns to block seismic surveys and other activity planned by Shell and other companies.

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Republikein 2024-07-22

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