TotalEnergies could lose the South African license if there is no production plan by September

CAPE TOWN, March 2 (Reuters) – Oil major TotalEnergies (TTEF.PA) could see its license to develop a major South African offshore gas find scrapped if it doesn’t submit a production plan by September, the oil and gas regulator said on Thursday.

TotalEnergies discovered two large gas fields, Brulpadda and Luiperd, in offshore Block 11B/12B approximately 175 km off the south coast of South Africa in 2019 and 2020.

“Their exploration rights expire in September 2022,” Phindile Masangane, chief executive of Petroleum Agency SA, told Reuters on the sidelines of an energy conference in Africa.

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“In any case, TotalEnergies and its joint venture partners must submit the application for their production by September 2022, otherwise the block will come back onto the market.”

TotalEnergies did not immediately respond to a request for comment.

At the request of the government, TotalEnergies has accelerated development of the Luiperd project, which will be connected to an existing offshore platform operated by national oil company PetroSA via an undersea pipeline less than 100 km long.

Masangane said TotalEnergies is in late-stage talks on a potential gas offtake agreement with PetroSA to supply its gas-to-liquid refinery facility in Mossel Bay, which is currently running well below capacity due to dwindling local gas reserves.

“They are finalizing gas and condensate supply negotiations for both PetroSA and (state-owned utility) Eskom, and we expect those negotiations to be finalized by June 2022,” Masangane said

The 45,000 bpd GTL refinery is adjacent to Eskom’s 740-megawatt Gourikwa facility, which uses primarily diesel but can be converted to gas. Eskom and PetroSA did not immediately respond to requests for comment.

Masangane said Luiperd is expected to cost around $2 billion to develop, with first production scheduled for 2026.

Luiperd and Brulpadda were the only two of five targets drilled on the Paddavissie Fairway, with PASA saying the two accounted for approximately 3.4 trillion cubic feet of gas and 192 million barrels of condensate found primarily in Luiperd.

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Reporting by Wendell Roelf; Edited by Louise Heavens and Jan Harvey

Our standards: The Thomson Reuters Trust Principles.

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