- TotalEnergies announced its withdrawal from offshore gas projects in South Africa.
- The company cited economic challenges as the primary reason for its decision.
- Energy policy and investment specialist Anton Eberhard criticized the Energy Ministry’s handling of the situation.
- The withdrawal has significant implications for South Africa’s energy sector and economic opportunities.
TotalEnergies has announced its withdrawal from offshore gas projects in South Africa, citing economic challenges as the primary reason.
Total Energies lists ‘challenges’ as chief reasons behind withdrawal
The company entered Block 11B/12B in 2013 and made two significant gas discoveries, Brulpadda and Luiperd.
However, it found these discoveries too challenging to develop and monetize economically for the South African market.
The company also decided to exit from offshore exploration Block 5/6/7, where it held a 40% interest. TotalEnergies mentioned that the economic conditions and development challenges made it unfeasible to continue these projects.
Energy policy and investment specialist Anton Eberhard criticised the Energy Ministry and Minister Gwede Mantashe for their handling of the situation.
Eberhard pointed out that the Energy Ministry allowed PetroSA to contract Lawrence Mulaudzi, a politically connected individual, to raise finance for offshore gas. Mulaudzi’s company has since been liquidated, adding to the setbacks.
“Despite the bluster and denials from the Energy Ministry, Total Energies has confirmed that they are abandoning South Africa’s only offshore gas discovery. This means PetroSA’s gas-to-petrol plant remains idle and Eskom cannot convert its expensive diesel plants to gas,” said Eberhard.
“The cost to South Africa is huge in lost royalties and economic opportunities.”
What does this mean for South Africa?
The withdrawal of TotalEnergies from these offshore gas projects has significant implications for South Africa.
The Brulpadda and Luiperd gas discoveries were considered crucial for boosting the country’s energy supply and reducing reliance on imported fuels.
The projects were expected to create jobs, stimulate economic growth, and enhance energy security.
With TotalEnergies exiting, South Africa loses a major international investor in its energy sector.
This decision leaves PetroSA’s gas-to-petrol plant in Mossel Bay idle and prevents Eskom from converting its costly diesel plants to gas.
This further exacerbates the country’s energy crisis, as Eskom continues to struggle with power shortages and loadshedding.
The failed attempt to secure financing through Lawrence Mulaudzi’s company, which has since been liquidated, also casts a worrying spotlight on issues of governance and accountability within the Energy Ministry.