TotalEnergies exiting offshore gas find a blow to energy future

The Mossgas refinery in Mossel Bay has been shut since 2020. Photo: John Woodroof

The Mossgas refinery in Mossel Bay has been shut since 2020. Photo: John Woodroof

Published Jul 4, 2024


French oil company TotalEnergies, which only this week received the Competition Tribunal nod for the sale of its 36% stake in the Natref oil refinery is now also withdrawing from its South African offshore gas field interests, a blow for the country as the gas was meant to revive the Mossgas petroleum refinery.

The latest international disinvestment from the oil sector follows the announcement two months ago by Shell to divest of its South African downstream unit, a plan that includes the exit of its interests in the Durban-based SAPREF refinery, which has been shut since 2022 due to a spending freeze. Shell also operates more than 600 service stations in the country.

Liquid Fuels Wholesalers Association of South Africa CEO Peter Morgan said while he could not speak on behalf of the oil groups, it appeared the divestments were due to international petroleum groups shifting focus to renewable-energy investments, and because their shareholders were not getting sufficient returns from their investments in South Africa.

The Chemical Industries Education and Training Authority, following questions from Business Report, said the exits were likely influenced by multiple factors. A significant reason was the global shift towards renewable energy – financial and market pressures were pushing these companies to diversify their portfolios and invest in renewable-energy technologies which are becoming more cost-competitive.

“However local factors such as regulatory uncertainties, infrastructure challenges, and market dynamics in South Africa also play a role in these decisions,” it’s directors said.

TotalEnergies has, according to a Reuters report, notified South Africa’s petroleum regulator that it intends to withdraw from its 11B/12B offshore gas fields, but has yet to submit a formal request. Business Report’s emailed questions to TotalEnergies in France were not replied to at the time of publication.

TotalEnergies discovered the first of two large, mainly gas finds in Block 11B/12B, named Brulpadda and Luiperd, offshore of the southern coast in 2019, and South Africa was banking on the gas potentially supplying the idle national gas-to-liquid refinery in Mossel Bay.

The refinery shut down in 2020 after its own offshore gas supplies ran dry.

As indication of how far the TotalEnergies’ project had fallen behind can be gleaned from the fact that the final investment decision had been targeted for 2023, and was not taken while the first gas was expected to be produced by the end of 2025.

The main reason for the withdrawal was the inability to secure a market for the gas, Reuters reported, citing unnamed sources. However, it was well known that talks over the gas price with the South African government had stalled for years.

In the meantime TotalEnergies invested heavily to explore neighbouring Namibia, a global exploration hotspot since TotalEnergies, Shell and Galp hit new finds.

TotalEnergies partnered with QatarEnergy in March to buy a stake in a licence seeking oil and gas on the West Coast of South Africa as part of plans to develop the Orange Basin in Namibia.

TotalEnergies was the operator, and held a 45% stake in the Brulpadda and Luiperd offshore blocks, while the remaining interest was held by Qatar Petroleum (25%); Canadian Natural Resources (20%); and Main Street (10%) – a South African consortium owned by Arostyle Investments and Africa Energy.