TotalEnergies, QatarEnergy farm in to South African oil exploration block

TotalEnergies and its partner QatarEnergy have boosted their positions in the South African portion of the prolific Orange Basin by farming into offshore Block 3B/4B, the two companies announced March 6.

Sitting 200 km off the western coast of South Africa and adjacent to TotalEnergies' Deep Water Orange Basin (DWOB) license in the country, the 17,581 sq km block has been primed for a drilling campaign, according to stakeholders.

The deal will see the French supermajor and state-owned QatarEnergy acquire participating interests from Africa Oil, Azinam -- a subsidiary of Eco Atlantic -- and Ricocure.

Upon completion, TotalEnergies will hold a 33% operating stake in Block 3B/4B and QatarEnergy 24%. Africa Oil will hold 17% alongside Ricocure with 19.75% and Azinam with 6.25%.

It follows TotalEnergies' vast Venus discovery in Namibia in 2022, which put the Orange Basin on the map as perhaps the world's most exciting exploration destination. Namibia was previously seen as an exploration graveyard after a string of disappointing spuds in the 1970s and 1980s.

The Namibian part of the basin also hosts Shell's major Graff and Jonker discoveries, and Galp's successful Mopane spud. According to early estimates, the Namibian Orange Basin could hold in-place resources of around 10 billion boe. Analysts at S&P Global expect Namibia's Orange Basin will see first oil in 2029.

While development of the South African portion has moved more slowly, Africa Oil has identified a series of exploration prospects in around 1,500 meters of water and has started working on plans to conduct a drilling campaign. Already, 3D seismic has been carried out on Block 3B/4B.

"Following the Venus success in Namibia, TotalEnergies is continuing to progress its exploration effort in the Orange Basin, by entering this promising exploration license in South Africa," TotalEnergies' senior vice-president for exploration Kevin McLachlan said in a statement.

"Attracting TotalEnergies and QatarEnergy as our new partners in Block 3B/4B is an endorsement of the exploration potential of the block. These opportunities are on trend with the discoveries in Namibia's Orange Basin, including Venus in Block 2913B," said Roger Tucker, CEO of Canada-based Africa Oil. "Both companies have deep geological knowledge of the basin with successful nearby discoveries. TotalEnergies, as the new operator, also brings extensive deepwater drilling and development expertise."

While the full value of the transaction was not disclosed, the Canadian E&P firm said that the value of the deal to Africa Oil was up to $46.8 million. Eco Atlantic, a pure-play exploration company focused on Atlantic Margins, said the maximum transaction value including carry to Eco Atlantic was up to $32.1 million.

TotalEnergies also holds offshore South African blocks 5/6/7, Orange Basin Deep, Outeniqua South and 11B/2B, for which it has applied for a production right. The French major discovered two massive gas fields off South Africa in 2019 and 2020.

The country is not yet an oil producer and relies on imports, despite significant hydrocarbon resources. Environmental groups have taken legal action to block oil and gas exploration in South African waters, while delays to key oil and gas legislation have seen industry players view South Africa's Orange Basin less positively than Namibia's.

The Upstream Petroleum Resources Development Bill, which is unlikely to become law before South Africa's May election, would provide greater certainty for operators and producers, advocates say.