TotalEnergies mulls over pull-out from South African offshore block while one partner stays put and another heads for exit

TotalEnergies EP South Africa, a subsidiary of France’s energy giant TotalEnergies, is pondering the options at its disposal regarding its stake in a block off the coast of South Africa, following the withdrawal announcement from one of the joint venture (JV) partners.

After notice from CNR International (South Africa), a subsidiary of Canada’s CNR, to the joint venture partners regarding its intention to withdraw its 20% interest from the joint operating agreement (JOA) for Block 11B/12B, TotalEnergies is said to be reviewing its options with regards to its 45% stake in Block 11B/12B under the JOA.

While CNR’s withdrawal is subject to all relevant regulatory approvals by South African authorities, the other parties may advise whether they will leave the JV within 30 days. Those leaving assign their interests free of charge to non-withdrawing partners in proportion to their stakes. 

On the other hand, Africa Oil, through its 49% investment in Main Street 1549 which currently holds a 10% interest, does not intend to withdraw from its stake in Block 11B/12B, as it believes that natural gas will play “a critical role” in South Africa’s energy transition, deeming the use of indigenous gas from the Block 11B/12B discoveries as “the most material domestic supply option” in South Africa.

TotalEnergies as operator holds a 45% participating interest in Block 11B/12B, while QatarEnergy and Canadian Natural Resources hold 25% and 20%, respectively. Located in the Outeniqua Basin approximately 175 kilometers off the southern coast of South Africa, the block covers an area of 18,734 square kilometers with water depths ranging from 200 meters in the north to 1,800 meters in the south.

The block contains the Luiperd and Brulpadda discoveries. TotalEnergies contracted Odfjell Drilling’s Deepsea Stavanger semi-submersible rig to drill the Brulpadda-1AX re-entry well, which spudded in December 2018. A large gas condensate discovery at the Brulpadda prospect was revealed in February 2019.

A few months later, the French oil major executed a drilling contract with Odfjell Drilling for the Deepsea Stavanger semi-submersible rig to return to South Africa and drill the Luiperd-1X well, which was spudded in August 2020. The firm announced a significant gas condensate discovery on the Luiperd prospect in October 2020.

Following these discoveries, the joint venture partners were considering an early production system (EPS) for a phased development of the Paddavissie Fairway, which would provide the first gas and condensate production from the Luiperd discovery and would accelerate the Block 11B/12B development timeline by utilizing existing nearby infrastructure on the adjacent block to supply gas to customers in Mossel Bay.

To that end, the JV applied for a production right in September 2022, proposing to relinquish the northern portion of the block, reducing the area from 18,734 square kilometers to around 12,000 square kilometers, and elected to enter a gas market development period to confirm the economic viability of the project.

Another Canada-headquartered oil and gas player, Eco (Atlantic) Oil & Gas, recently announced its plans to give up its interest in a block off the coast of South Africa. However, this firm also took steps to take over a majority stake and operator role at another offshore block in the Orange Basin, which is said to be on trend with recent giant oil discoveries offshore Namibia.