After pressure by foreign-funded NGOs, several companies have come to regard South Africa's offshore gas deposits as an insecure investment
Eco (Atlantic) Oil & Gas has reached an agreement with Africa Oil to reduce its stake in Block 3B/4B offshore South Africa. This strategic move sees Azinam, Eco's wholly-owned subsidiary, transferring a 1% interest in the block, along with associated Exploration Right and Joint Operating Agreement rights, to Africa Oil.
In exchange, Africa Oil will cancel all its common shares and warrants over common shares in Eco. As a result, Eco will retain a fully carried 5.25% interest in Block 3B/4B, down from its previous 6.25%.
In a related development, TotalEnergies and QatarEnergy International have decided to withdraw from Block 11B/12B off the southern coast of South Africa. Despite making significant gas-condensate discoveries on the Brulpadda and Luiperd prospects in 2019 and 2020, the partners found commercialization to be economically unviable for the South African market. TotalEnergies has also opted to exit Block 5/6/7, where it holds a 40% interest.
CNR International, another partner, announced its planned departure from Block 11B/12B earlier this month. However, Africa Energy Corp., based in Vancouver, intends to maintain its indirect interest through Main Street 1549, which holds a 10% share in the block. Africa Energy remains optimistic, stating that the Brulpadda and Luiperd discoveries are the largest natural gas finds in South Africa and have the potential to significantly contribute to the country's energy needs, particularly as it transitions away from coal-fired power plants.
Subject to regulatory approvals, Main Street 1549 would assume a 100% interest in Block 11B/12B and focus on obtaining production rights and securing offtake customers.
Recently two foreign-funded environmental lobby groups, The Green Connection and Natural Justice, launched a legal challenge against the decision to grant TotalEnergies environmental authorisation for exploratory drilling in block 5/6/7, located between Cape Town and Cape Agulhas.
The groups filed a review application with the high court in Cape Town, seeking to overturn the Department of Mineral Resources & Energy (DMRE) decision and the subsequent rejection of appeals by Environment Minister Barbara Creecy.
The actions have been regarded as a major investment risk for foreign drilling operations, precipitating the divestment.
Block 3B/4B, situated 120-250 km offshore western South Africa in water depths ranging from 300-2,500 meters, has seen significant exploration activity. In 2012, BHP Billiton, the former license holder, conducted a 10,000-square-kilometer GeoStreamer 3D survey over the acreage. This data was reprocessed by the current block partners in 2022 to refine leads and prospects for future drilling operations.
Elsewhere, Eco is engaged in a multi-block farm-out process for its four petroleum exploration licenses in the Walvis Basin offshore Namibia. These licenses cover Blocks 97, 98, 99, and 100, all operated by Eco. The company is also pursuing farm-out opportunities for its Orinduik Block offshore Guyana, adjacent to ExxonMobil's prolific Stabroek Block, where a seventh development on the Hammerhead discovery area is planned.
