- Bloomberg reports that 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.
- This follows their decision made earlier this year to divest the 36.36% minority stake, held by TotalEnergies Marketing South Africa, in National Petroleum Refiners of South Africa (Natref) to the Prax Group.
The French giant braved one of the fastest ocean currents in the world to drill off South Africa’s coast, spending at least $400 million to find an estimated 1 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 people said.
In March this year, TotalEnergies signed, together with its partner QatarEnergy, an agreement to acquire participating interests in Block 3B/4B, offshore South Africa, from Africa Oil South Africa, Azinam (a wholly owned subsidiary of Eco Atlantic Oil and Gas) and Ricocure. TotalEnergies will hold a 33% participating interest in Block 3B/4B and assume operatorship, while QatarEnergy will hold a 24% interest.
The remaining interests will be held by existing license holders, Africa Oil SA (17%), Ricocure (19.75%) and Azinam (6.25%).
Located within the prolific Orange basin, 200 km off the western coast of South Africa, Block 3B/4B covers an area of 17,581 km2. Block 3B/4B is adjacent to the DWOB license operated by TotalEnergies (50%) alongside QatarEnergy (30%) and Sezigyn (20%).
“Following the Venus success in Namibia, TotalEnergies is continuing to progress its Exploration effort in the Orange Basin, by entering this promising exploration license in South Africa”, said Kevin McLachlan, Senior Vice-President Exploration of TotalEnergies.
TotalEnergies didn’t immediately respond to requests for comment. A spokesperson for Petroleum Agency South Africa wasn’t immediately able to comment.
South Africa is set to run out of gas
The Industrial Gas Users Association of Southern Africa (IGUA-SA) warn that the country will run out of natural gas supply in 2026. Sasol, South Africa’s monopoly supplier of large-scale natural gas, announced in August 2023 that the supply of gas to industrial users will be suspended by June 2026. This unilateral decision to cut off the gas supply poses an existential threat to South Africa’s manufacturing base say IGUA-SA.
Since it is not feasible for industry to single-handedly invest in and develop national-scale private natural-gas infrastructure (including bulk pipelines, LNG port terminals and re-gasification terminals), urgent action is required on the part of the South African government to adequately address this crisis.
That said, industry has actively but unsuccessfully engaged government on possible solutions. There have been two separate applications to import LNG and install the required infrastructure (including pipeline networks) since 2010, and both applications were opposed by Sasol and the country’s energy regulator, NERSA, thus protecting Sasol’s entrenched position.
Author: Bryan Groenendaal
