South Africa’s Energy Minister Calls for Closer Collaboration With Oil Majors

South Africa’s government needs to provide more support and work closer with the big international energy groups to help them develop its offshore oil and gas resources, South Africa’s Energy Minister Kgosientsho Ramokgopa told the Financial Times in an interview published on Tuesday.

South Africa has seen Big Oil, including Shell and TotalEnergies, make several major oil and natural gas discoveries off its southern and western coasts in recent years.

However, TotalEnergies announced in July it is withdrawing from Block 11B/12B, where one of the country’s biggest natural gas discoveries has been made.

TotalEnergies’s affiliate TotalEnergies EP South Africa held a 45% interest in the block off the Southern coast of South Africa.

TotalEnergies entered into Block 11B/12B in 2013 and made two gas discoveries, Brulpadda and Luiperd.

But these discoveries could 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 French supermajor said in July.

Although TotalEnergies hasn’t offered details about its decision to abandon the gas block, industry investors have told FT that the refusal of South Africa’s state oil and gas firm PetroSA to agree to a deal to buy gas from the future project was partly the reason for the French group’s withdrawal from the block.

In the interview with FT, minister Ramokgopa said that South Africa could have done more to ensure TotalEnergies can commercially develop and monetize the project.

“Domestic gas is far cheaper than imported gas, so we need to do more to work with players who can help us exploit these reserves,” Ramokgopa told FT.

TotalEnergies isn’t abandoning South Africa’s offshore upstream: it has already bet on future exploration for oil in the Orange Basin which straddles the newest exploration hotspot Namibia and South Africa.

Earlier this year, TotalEnergies and QatarEnergy expanded their efforts to explore for oil and gas in the Orange Basin by acquiring a nearby license in the basin in South African waters. 

South Africa needs domestic resources, especially gas for power generation, as it has been in the grips of an energy crisis with daily rolling power cuts that have been crippling the economy. State-owned utility Eskom has continually failed to boost generation capacity to keep pace with growing demand.

By Tsvetana Paraskova for Oilprice.com

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