Despair over gas project withdrawal

GARDEN ROUTE NEWS - Members of the public and people in business have voiced despair over the news of TotalEnergies', and its two joint venture partners' withdrawal from offshore Block 11B/12B.

The block (known as Brulpadda and Luiperd) is between 75km and 120km offshore of the Southern Cape coast, between Mossel Bay and Cape St Francis.

TotalEnergies announced its withdrawal of its 45% interest in the discovered gas and condensates in a statement on Monday, 29 July. Joint partners, CNR International, which held 20% interest, and QatarEnergy, which held 25%, have also withdrawn. This leaves only Africa Energy Corp., which holds 10% interest through its investment in Main Street.

Locals commented on Mossel Bay Advertiser's article on the withdrawal on Facebook, with most stating the exit was a massive blow for Mossel Bay.

The Advertiser also spoke to two business people from the Garden Route, Dr Dennis Farrell, managing advisor at Business Café in George and Dr Willie Cilliers, the Afrikaanse Handelsinstituut (AHi) chairperson for the Western Cape who said "the socio-economic implications could be devastating" and "it is a disaster for the local economy" respectively.

"The socio-economic implications could be devastating as there could already have been a migration of skilled, semi-skilled and unskilled labour to Mossel Bay in expectation of the development," said Farrell.

"According to the Standard Bank report of 4 May, SA GAS Optionality, the projected major macro-economic benefits from the development include a fiscal contribution of an annual GDP of R22bn.

"This includes a direct job creation of 1 500. Indirect job creation would be 5 000, while employment opportunities are estimated at 42 000.

"The bottom line is all efforts must be made to keep TotalEnergies in the development," he said.

Cilliers said, "The withdrawal of TotalEnergies is a disaster for the local economy. The economy is so vital for job creation that if you look further into the whole negative impact of this situation," he said.

"All the network value chains supporting the company - these are what we have lost now. It is indeed a sad day and it will be felt in the economy of the area."

TotalEnergies noted in its statement that the two gas discoveries, Brulpadda and Luiperd, "could not be turned into a commercial development as it appeared to be too challenging to economically develop and monetise these gas discoveries for the South African market".

Answering questions from the Advertiser, the Department of Mineral Resources and Energy (DMRE) stated that it noted TotalEnergies' withdrawal and it was "confident a suitable investor will come on board and be able to monetise the gas discoveries".

The DMRE stated: "Additionally, we are pleased that TotalEnergies is not entirely leaving oil and gas opportunities in South Africa as it still holds exploration rights over blocks, Deep Water Orange Basin and Orange Basin Deep, Outeniqua South and Block 3B/4B, east of Deep Water Orange Basin.

"The Department remains committed to the exploration of the country's oil and gas resources and will intensify engagements with key role players to ensure the development and sustainability of the sector."

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