TotalEnergies, the French energy conglomerate, has announced its intention to exit its gas-condensate discoveries off the southern coast of South Africa. This strategic shift is aimed at redirecting exploration efforts to regions closer to Namibia, which hold greater promise for viable extraction, according to sources familiar with the company’s plans.
The decision to pull out from the South African ventures follows significant investment and exploratory success in the region. TotalEnergies spent over $400 million in challenging conditions, battling one of the world’s fastest ocean currents to drill at the Brulpadda field, discovered in 2019. This field and the subsequent Luiperd well, discovered in 2020, together boast an estimated yield of 1 billion barrels of light liquid hydrocarbon. However, despite these initial successes, neither project has advanced to the development stage.
According to sources, TotalEnergies intends to renounce its license for Block 11B/12B due to doubts about the deep-water discoveries’ potential for profit. The main obstacle is the very tiny gas market in South Africa, which makes such large-scale operations financially more difficult to implement. As a result, the business is focusing on the Orange Basin, which is situated on the northern Atlantic coast. This region may offer a more profitable possibility for exploration and production because it is close to promising oil discoveries in Namibian waters.
As of now, TotalEnergies has not publicly responded to requests for comments on this strategic shift. The potential withdrawal from these projects represents a significant setback for South Africa’s energy ambitions. The country, which currently relies heavily on coal, had hoped that production from these offshore fields would support a transition to cleaner energy sources and provide essential feedstock for PetroSA’s gas-to-liquids plant. This plant, which processes 45,000 barrels per day, is facing feedstock shortages due to the depletion of other local fields.
Moreover, Africa Energy Corp., holding a 20% stake in the discoveries, has announced its intention to exit the joint operating agreement with its partners following advice that TotalEnergies’ local unit is reevaluating its position. The spokesperson for the Petroleum Agency of South Africa was not immediately available for comment on these developments.
This decision is made in the midst of more significant issues that the South African oil and gas industry is dealing with, such as uncertain legislation and hold-ups in the implementation of new hydrocarbon regulations. Explorators and investors hoping to get their hands on the nation’s possible oil and gas assets have been dissatisfied by these delays. The operating environment for oil firms in the region is further complicated by environmental campaigns against seismic surveys and other exploratory activities, especially by groups opposing Shell Plc and similar companies.
