TotalEnergies has announced its withdrawal from the Brulpadda and Luiperd gas-condensate discoveries off the southern coast of South Africa, dealing a significant blow to the country’s plans to increase the use of natural gas for power generation.
In a statement released on Monday, TotalEnergies cited economic challenges as the primary reason for its decision to exit these finds, stating that “it appeared to be too challenging to economically develop and monetize these gas discoveries for the South African market.” Earlier this month, Bloomberg reported that the discoveries could not be made commercially viable, prompting TotalEnergies to leave.
This decision comes at a critical time for South Africa, which imports all its oil and gas and is seeking to diversify its energy sources to reduce its heavy reliance on coal. The potential production from these fields was also intended to supply feedstock for PetroSA’s gas-to-liquids plant, which processes 45,000 barrels per day.
The Department of Mineral and Petroleum Resources has not yet responded to requests for comment on TotalEnergies’ exit. Minister Gwede Mantashe has been a staunch advocate for oil exploration, defending the activities of Shell and other companies against environmental opposition. New oil legislation has been introduced to provide clarity for explorers, addressing uncertainties that have previously hampered exploration efforts.
TotalEnergies invested at least $400 million to drill in the Brulpadda and Luiperd fields, using innovative engineering solutions to navigate one of the world’s fastest ocean currents. In 2019, the company discovered an estimated 1 billion barrels equivalent of light liquid hydrocarbons at Brulpadda, followed by a successful find at Luiperd in 2020. Despite these promising discoveries, neither field advanced to the development stage.
Additionally, TotalEnergies is exiting the oil block 5/6/7 off the coast of Cape Town. However, the company will maintain its presence in Block 3B/4B and other areas closer to Namibia’s maritime border, where significant discoveries have been made.
TotalEnergies’ departure from these key projects underscores the economic and operational challenges facing the development of South Africa’s offshore gas resources, complicating the nation’s efforts to transition to more sustainable energy sources.
Main Image: Reuters
