Total’s oil and gas discovery worth R1trn

By Paul Burkhardt, Bloomberg/Fin24

Total SA said it has opened up a new “world-class” oil and gas province off the coast of South Africa after making a significant gas-condensate discovery there will provide a boost for the economy of R1-trillion over the next 20 years.

Success in the nation’s first deep-water well is a potential boon for a country that imports most of its oil, processing the remainder of its fuels from coal and natural gas.

“We are very pleased to announce the Brulpadda discovery, which was drilled in a challenging deep-water environment,” Kevin McLachlan, senior vice president of exploration at Total, said in a statement on Thursday.

“Total has opened a new world-class gas and oil play and is well-positioned to test several follow-on prospects on the same block.”

Total, the operator, now plans to acquire 3D seismic data before drilling as many as four more exploration wells at the license.

“It’s a catalytic find,” Niall Kramer, chief executive officer of the South African Oil & Gas Alliance, an industry lobby group, said by phone. The country has only drilled in shallow waters before, with little to show for it, he said. “There’s nothing that has been on this kind of scale.”

Exxon, Eni

The new oil and gas region, with estimated volumes of around 1 billion barrels according to consultant Wood Mackenzie, has drawn interest from explorers including Exxon Mobil and Eni SpA, which also hold stakes in the waters.

“It’s probably quite big,” Total CEO Patrick Pouyanne said Thursday on a conference call. “Having said that, the region is quite difficult to operate: huge waves, the weather isn’t very easy.”

Total was drilling about 175 kilometers (109 miles) offshore in the Outeniqua Basin to a final depth of 3 633 meters (11 900 feet). The discovery, which also includes some light oil, could prompt a rush of activity offshore by other companies, especially since South Africa is due to introduce new oil and gas legislation later this year aimed at spurring exploration.

Africa as a whole has seen an increase in drilling, with oil and gas rigs around the continent topping 100 in recent months, according to Baker Hughes data. The count was as low as 77 in 2017.

Total has a 45% working interest in Block 11b/12B, Qatar Petroleum holds 25%, CNR International 20% and Main Street, a South African consortium, 10%.

Meanwhile, Minister of Mineral Resources Gwede Mantashe told delegates on the last day of the 2019 Investing in African Mining Indaba on Thursday that his department’s plan to separate oil and gas from the Mining Charter and develop separate legislation for the extraction method would yield immediate impact.

He lauded Total’s discovery as one of the outcomes.

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