French oil major TotalEnergies announced on Monday that it would withdraw from an offshore natural gas block off South Africa’s southern coast, citing the commercial challenges of developing the finds, Reuters reported.
Earlier this month, TotalEnergies had indicated its plan to exit Block 11B/12B, a huge setback for South Africa’s ambitions to achieve energy independence by developing its largest offshore gas discoveries to date.
“TotalEnergies entered into Block 11B/12B in 2013 and made two gas discoveries, Brulpadda and Luiperd, which could however not be turned into a commercial development as it appeared to be too challenging to economically develop and monetize these gas discoveries for the South African market,” the company said in a statement, without giving further details about the challenges.
Oil companies have encountered numerous court challenges from environmentalists and bureaucratic delays, which have diminished investor interest in South Africa’s offshore zone. The region’s rough seas and strong currents further complicate exploration efforts.
TotalEnergies’ exit follows an earlier decision by its Canadian partner, CNRI, to withdraw from Block 11B/12B. This block was seen by the South African government as a potential supplier of gas to the idle gas-to-liquid plant at Mossel Bay, operated by national oil and gas company PetroSA.
TotalEnergies, which held a 45% stake in Block 11B/12B, also decided to exit offshore exploration on the west coast in Block 5/6/7, where it had a 40% interest.
However, the company retained its stake in Block 3B/4B, located on South Africa’s side of the Orange Basin, just south of significant discoveries by Galp, Shell, and TotalEnergies’ own Venus discovery in neighbouring Namibia.
