TotalEnergies and QatarEnergy expand their footprint in Africa’s Orange Basin

Two energy giants, France’s TotalEnergies and Qatar’s QatarEnergy, have increased their presence in the Orange Basin with more offshore acreage by getting interests in a block off the coast of South Africa ahead of offshore exploration activities.

The deal TotalEnergies and QatarEnergy made with Africa Oil, Eco Atlantic’s Azinam, and Ricocure, in March 2024 has enabled them to acquire participating interests in Block 3B/4B, which is located within the prolific Orange Basin, 200 km off the western coast of South Africa. The block is adjacent to the DWOB license operated by TotalEnergies (50%) alongside QatarEnergy (30%) and Sezigyn (20%).

The Orange Basin has turned into an exploration hotspot lately with TotalEnergies’ Venus-1, Shell’s Graff-1, La Rona, and Jonker-1X, along with Galp’s Mopane oil discoveries coming to light. Africa Oil has retained a direct 17% interest in Block 3B/4B and transferred the operatorship of the block to TotalEnergies.

With a maximum transaction value of up to $46.8 million, Africa Oil will receive, subject to achieving certain milestones defined in the agreement, staged cash payments for a total cash payment of $10 million of which $3.3 million is now due, and the remaining balance in two payments conditional upon achievement of key operational and regulatory milestones.

In addition, Africa Oil will get a full carry of its 17% retained share of all JV costs, up to a cap, repayable to TotalEnergies and QatarEnergy from production in case of exploration success and development, which is expected to be adequate to fund the company’s share of drilling for up to two wells on the license.

Dr. Roger Tucker, Africa Oil’s Chief Executive Officer, commented: “Africa Oil has an unrivalled position amongst its Independent E&P peer group in the world-class Orange Basin. This includes our interest in the Venus discovery and the follow-on appraisal and exploration upside on Block 2913B, offshore Namibia.

“This farm down with TotalEnergies and QatarEnergy, two companies with deep geological knowledge of the basin, will facilitate exploration activities on Block 3B/4B, and extends our near-term scope for testing significant upside potential in our portfolio.”

Thanks to a separate agreement between Africa Oil, AOSAC, Eco (Atlantic) Oil & Gas, and Eco’s subsidiary, Azinam, signed in July 2024, AOSAC will acquire an additional 1.% in Block 3B/4B from Azinam, subject to the satisfaction of customary conditions precedent, including approvals from the government of South Africa.

Covering an area of 17,581 km² within the Orange Basin offshore South Africa in water depths ranging between 300 and 2,500 m, Block 3B/4B lies to the southeast, and is on-trend with several oil discoveries including the Venus discovery. There is approximately 14,000 km² of 2D seismic and 10,800 km² of 3D seismic over Block 3B/4B and a large opportunity set of exploration prospects has been identified.

Eco also decided to relinquish its 50% operated interest in Block 2B offshore South Africa, where it drilled its 2022 Gazania-1 well, offsetting the AJ-1 oil discovery. Currently, AOSAC has a 17% interest in Block 3B/4B (26.25% before completion of the agreement) with TotalEnergies holding a 33% operated interest; QatarEnergy holding 24%; Ricocure holding 19.75%; and Azinam holding 6.25%.  

Upon the completion of the Eco agreement, which is subject to the satisfaction of customary conditions precedent, including approvals from the government of South Africa, the interests in Block 3B/4B will be comprised of 18% held by AOSAC; 33% held by TotalEnergies; 24% held by QatarEnergy; 19.75% held by Ricocure; and 5.25% held by Azinam.

Africa Oil recently took steps to expand its ownership interest in Impact Oil & Gas, an Africa-focused exploration player with hydrocarbon exploration and appraisal assets in the Orange Basin off the coast of Namibia.