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Two environmental groups have challenged in court French oil company TotalEnergies’ plan to drill five wells off the coast of South Africa. The groups intend to halt drilling, claiming that the environmental impact assessment has not been carried out in accordance with the requirements.
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TotalEnergies acquired a 33% stake in an exploration block off the coast of South Africa in early March. QatarEnergy also acquired a stake in Block 3B/4B, adjacent to the Venus prospect in Namibian waters, where TotalEnergies and QatarEnergy have made a significant discovery. In fact, it is the maximum discovery made in the Orange Basin shared by Namibia and South Africa.
With 3 billion barrels mined on Venus, TotalEnergies turns out to be doing what any other major company would do under those circumstances: an oil edition of the “follow the vein” rule. against the backdrop of an underdeveloped legislative regime on oil and fuels in South Africa, and widespread corruption. Related: Baltimore’s Coal Exports Stalled After Bridge Collapse
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Over the past three years, oil and fuel companies, plus big business, have been incredibly cautious. They’ve also been incredibly frugal despite their record earnings in 2022. Low-risk assets were prioritized and high-risk assets were put up for sale. With activists breathing and governments employing providential taxes on profits as a way to punish the industry for what it is, it was hard to be generous and reckless with investments.
However, from a safe point of view, this is precisely what TotalEnergies and QatarEnergy are doing right now: recklessly expanding into a region with no significant oil discoveries to date and with a colorful network of climate activists that already has a scalp under its belt: in 2022, activists were given a South African court to revoke Shell’s exploration permit off the Wild Coast.
There is also no regulatory clarity, as the South African government has been slow to pass a bill on the progress of oil resources, attributing the delays to the same activists who convinced Shell, according to a study of the South African oil situation by Energy Intelligence. There’s also the corruption factor, but in the above context, it can be a relatively minor annoyance: corruption is popular around the world, and there’s a good chance TotalEnergies knows how to deal with it.
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TotalEnergies already exploited some of those resources (fuel condensates) off the coast of South Africa in 2020. It has made two discoveries in the Luiperd prospect, which is very promising for the supply of fuel to the domestic market.
This would have been a positive first update for South Africa, which suffers from chronic blackouts and whose reliance on coal for power generation makes a very bad impression in the West. So much so that the West has offered the country $8. 5 billion to leave. of coal. However, the only way for South Africa to achieve this is to first locate a reliable substitute.
According to the Energy Intelligence study, the allocation of fuel to Luiperd failed because the government may not agree on the price of fuel with TotalEnergies and its development partners. Corruption and bureaucratic hurdles have also contributed to this, Energy Intelligence noted, mentioning one concerned investor. “Although the rationale and rhetoric recommend that the fuel is needed as a transition fuel, the self-interest aligned with coal and diesel has not been favorable. “
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Perhaps the oil wealth of the Orange Basin is expanding into South African waters at the same rate. Or it’s worth taking the risk to find out if that’s the case, as demand for oil will remain strong enough over the long term. to justify the push for exploration outside of South Africa.
By Irina Slav for Oilprice. com
Further reading in Oilprice. com:
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