Total and CNR to pull out of Cape drilling project after foreign-funded NGO action

The project was located 175 km off South Africa’s southern coast in the Outeniqua Basin, and included the significant gas-condensate discoveries.





Jul 2, 2024

Total and CNR to pull out of Cape drilling project after foreign-funded NGO action

CNR International has announced its intention to withdraw from the joint operating agreement for deepwater Block 11B/12B, located 175 km off South Africa’s southern coast in the Outeniqua Basin. This block includes the significant Luiperd and Brulpadda gas-condensate discoveries.

Recently two foreign-funded environmental lobby groups, The Green Connection and Natural Justice, launched a legal challenge against the decision to grant TotalEnergies environmental authorisation for exploratory drilling in block 5/6/7, located between Cape Town and Cape Agulhas.

The groups filed a review application with the high court in Cape Town, seeking to overturn the Department of Mineral Resources & Energy (DMRE) decision and the subsequent rejection of appeals by Environment Minister Barbara Creecy.

The authorisation allows TotalEnergies to explore an area of about 10,000 km², located 60 km to 170 km from the coast, at depths ranging from 1,000m to 3,200m. TotalEnergies holds rights to this block along with Shell and PetroSA.

Liziwe McDaid of The Green Connection emphasised the potential long-term impacts on coastal communities and the ocean. She argued that the DMRE’s decision and Creecy’s dismissal of appeals were not in the public interest.

The legal grounds for the review highlight the government's failure to assess the socioeconomic impact of a potential oil spill on local fisheries and disregard for climate change effects linked to oil and gas usage.

The groups also raised concerns over the lack of proper evaluation of oil spill blowout contingency plans.

TotalEnergies and PetroSA had been in discussions about supplying gas from blocks 11B/12B to PetroSA’s gas-to-liquids refinery in Mossel Bay, which has been idle since 2020 due to the depletion of offshore gas feedstocks.

The gas companies are likely to have pulled out due to the legal risk - the murky funding structure of the aforementioned foreign lobby groups implies rather deep pockets for legal action.

CNR International, a subsidiary of Canada’s CNR, plans to exit its 20% interest in the Block 11B/12B joint venture, subject to approval from South African authorities.

TotalEnergies, which holds a 45% controlling interest, have 30 days to decide whether to withdraw. Those who leave will assign their interests to the remaining partners proportionally.

TotalEnergies is currently reviewing its options regarding its stake in the block. Meanwhile, Africa Energy, with a 10% interest, intends to stay, emphasizing the critical role of natural gas in South Africa's energy transition.

TotalEnergies operates the block with a 45% interest, while QatarEnergy and Canadian Natural Resources hold 25% and 20%, respectively.

Block 11B/12B, covering 18,734 square kilometers with water depths from 200 to 1,800 meters, contains the Luiperd and Brulpadda discoveries. TotalEnergies made significant gas condensate discoveries in 2019 and 2020, contracting Odfjell Drilling’s Deepsea Stavanger rig for drilling operations.

Following the discoveries, the joint venture partners considered an early production system to accelerate the development timeline using existing infrastructure. A production right application was submitted in September 2022, proposing to reduce the block's area to around 12,000 square kilometers and confirm the project's economic viability.

Eco (Atlantic) Oil & Gas, another Canadian firm, recently announced plans to relinquish its interest in a block off South Africa's coast while pursuing a majority stake in another offshore block in the Orange Basin, following recent large oil discoveries offshore Namibia.

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