U.S. Markets open in 6 hrs 29 mins

Total Makes Big Offshore Oil Discovery in South Africa

James Hyerczyk
Total Discovers South Africa’s First Deep-Sea Oil and Gas Reservoirs In Southern Cape.

Total, a French oil company, has made their biggest offshore oil discovery in South Africa after a successful natural gas drill in cape coast. According to the company the discovery was made on Block 11B/12B located 180 kilometers of the country’s southern coast. It also estimates that the reservoir may hold between 500 million and 1 Billion barrels of oil, enough to supply the country’s refineries for the next four years.

Resuming operations and overcoming harsh conditions

The French oil giant maintains a 45% stake in the shared exploration field 11B/12B, popular for its harsh conditions. While it has maintained control of the exploration areas for decades, the company stopped drilling operations in 2014 citing harsh off-shore conditions that are characterized by huge waves. It would, however, resume operations after importing a rig from Norway that proved effective in finding deep sea reserves.

While making the announcement, Total’s Vice President for exploration, Kevin McLachlan, mentioned that the discovery puts the company and country on the list of major gas and oil players in the world. Moving forward, he mentioned that the company would continue to conduct several tests as a follow up of the block’s prospects. He further added that the oil giant plans to acquire 3D seismic data and drill up to four exploration wells before year-end.

Increased rush for the Block

The discovery might see a spike in the number of exploration companies interested in the block as well as increased rush by current players. These include Qatar Petroleum Company, CNR International, and South Africa’s Main Street Consortium that hold 25%, 20%, and 10% stake in the said block respectively.

While most of these companies were hoping for this discovery, experts believe it is a game-changer for South Africa. The CEO of the country’s Oil & Gas Alliance, Niall Kramer, still considers the discovery a catalytic find. Kramer’s remarks were a response to Woodmac research company’s data that considers the newly-discovered reservoirs to be three times larger than any other gas exploration in the country to date.

Reprieve for the government

The gas discovery and prospects of the exploration of more reserves offers a reprieve to the government in its effort to boost its ailing economy. While assuming office, the country’s President, Cyril Ramaphosa, promised to attract over $100 billion in foreign investment that would go towards reviving the country’s economy. More importantly, rapid monetization of the reserves will go a long way toward unburdening the country’s energy supply, which has for the longest time relied on coal and the expensive diesel-powered turbines.

More Prospects

The block 11B/12B, in which Total discovered the natural gas reserve, covers up to 19,000 square kilometers. With a large portion of this area remaining unexplored, primarily due to the harsh conditions around the Cape coast, multi-national explorers operating in the region, as well as the government, remain hopeful. Total Oil that established its presence in the country in 1954 has already announced their plan of following up on more prospects that it believes will lead them towards even larger reserves.

This article was originally posted on FX Empire

More From FXEMPIRE: