Canadian oil and gas exploration company Africa Energy has confirmed the deadline extension for the environmental impact assessment report (EIAR) at a block off the coast of South Africa, which will be fully owned by the firm’s affiliate, Main Street 1549, as its partners are determined to pull out.
The withdrawal of CNR International, TotalEnergies, and QatarEnergy from Block 11B/12B, disclosed in July 2024, is subject to all relevant regulatory approvals by South African authorities. Once all regulatory approvals are received, Africa Energy’s Main Street 1549 will focus on the block’s production right approval and securing offtake customers.
According to the Canadian firm, its joint venture partners in Block 11B/12B have obtained an extension to the submission deadline for the EIAR, which has now been prolonged to May 19, 2025. In light of the withdrawal of the joint venture partners, the firm is currently assessing the best way forward concerning the environmental application process.
Africa Energy has explained that the approval of the production right application will not occur until after the Block 11B/12B joint venture receives environmental authorization for the EIAR. The firm, through its investment in Main Street 1549, which currently holds a 10% interest in Block 11B/12B, does not intend to withdraw.
Challenges and Opportunities in South Africa's Offshore Gas Sector
The exit of TotalEnergies, QatarEnergy, and CNR International from Block 11B/12B represents a significant shift in the South African offshore gas landscape. The withdrawal, announced on July 29, 2024, raises questions about the future of this promising gas reserve and South Africa’s energy security goals.
Navigating the Regulatory Landscape
The decision to withdraw from Block 11B/12B is subject to regulatory approvals from South African authorities. Africa Energy, through Main Street 1549, is poised to assume full ownership of the block, pending these approvals. This transition marks a crucial phase, requiring a deft handling of the regulatory process to ensure a smooth handover and continued exploration.
The Appeal of Block 11B/12B
The Brulpadda and Luiperd discoveries, made by TotalEnergies in 2013, hold immense potential. Located in the Outeniqua Basin, approximately 175 kilometers off the southern coast of South Africa, Block 11B/12B spans 19,000 square kilometers with depths ranging from 200 to 1,800 meters. The block is strategically positioned to contribute significantly to South Africa’s energy needs as the nation seeks to transition away from coal-fired power plants.
Addressing the Economic Challenges
TotalEnergies’ decision to withdraw from Block 11B/12B, after years of exploration, was attributed to the complexities of economically developing and monetizing the gas discoveries for the South African market. While the gas reserves are substantial, the challenges of navigating the Agulhas current, a notoriously strong and unpredictable ocean current, have added to the costs and risks associated with the project.
The withdrawal also highlights the need for a more collaborative approach between the South African government and international energy companies. South Africa’s Energy Minister Kgosientsho Ramokgopa has acknowledged the need for increased support and closer collaboration to ensure the successful development of offshore oil and gas resources.
A Future Filled with Possibilities
Despite the challenges and setbacks, the potential of South Africa’s offshore gas reserves remains a powerful incentive for continued exploration and development. The presence of other major players like ExxonMobil and Shell in the region suggests that the South African offshore sector still holds significant allure for international energy companies.
Africa Energy’s commitment to Block 11B/12B signifies a belief in the long-term value of this project. The company’s focus on securing production rights and offtake customers underscores its determination to bring these gas discoveries to fruition. As Africa Energy navigates the regulatory landscape and addresses the economic challenges, the future of Block 11B/12B will be closely watched, providing valuable insights into the evolution of South Africa’s energy sector.
