London — Shell has farmed in to South African deepwater exploration blocks days after Total announced a second gas and condensate discovery nearby, as interest grows in a potential new gas condensate hub off the country's south coast.
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Shell is purchasing 50% stakes and the right to operate the Transkei and Algoa blocks in a farm-in deal with UK private company Impact Oil & Gas, the latter said.
The Algoa block lies in the same basin as Total's 2019 Brulpadda discovery and its October Luiperd discovery. The Transkei block is in a different, nearby geological basin, where "Impact has identified highly material prospectivity associated with several large submarine fan bodies, which this joint venture will explore with focused 3D seismic data and then potential exploratory drilling," Impact said in a statement.
A Shell spokesman said: "This deal is in line with our exploration strategy to selectively add new exploration basins to our global portfolio."
Recent discoveries raise hopes of a new push for gas in South Africa's coal-dominated energy sector.
Shell has not been involved in developing neighboring Mozambique's major gas resources, primarily intended for LNG export, but is a partner in a delayed gas project offshore Tanzania.
Total's Luiperd well encountered 73 meters of net gas condensate pay in "well-developed good quality" reservoirs, coming after Brulpadda was classed as one of the world's biggest hydrocarbon finds of 2019. "This discovery and the successful seismic acquisitions...will help to progress development studies and engage with South African authorities regarding the possible conditions of the gas commercialization," Total's upstream head, Arnaud Breuillac, said Oct. 28.
Impact Oil & Gas earlier said it was expanding its acreage holding in the area with a farm-in agreement to take a 90% stake in Area 2, immediately adjacent to Algoa and Transkei.
Total operates block 11B/12B with a 45% working interest, alongside Qatar Petroleum (25%), Canada's CNR international (20%) and Main Street, a consortium 49%-owned by Lundin Group company Africa Energy. Both Impact and Africa Energy are partly owned by another Lundin Group company, Vancouver-based Africa Oil.
The French major also operates the adjacent, even larger Outeniqua South block which has yet to be drilled and extends out to water depths of more than 4,000 meters.
The Luiperd discovery well will be tested to assess the reservoir characteristics and flow rates over the next few weeks following a well coring and logging program, the partners in that find said earlier.
South Africa's new-found gas condensate resources in the area are expected to kickstart the country's gas-to-power program and help replenish gas supply to the Mossel Bay gas-to-liquids plant. The South African government has voiced concerns that the PetroSA GTL plant at Mossel Bay could run out of natural gas within two years when the existing offshore reserves dry up.
If the production from the finds is used as a feedstock for its gas-to-power plants, that will reduce or eliminates the need for South Africa to import LNG or construct additional pipelines from Mozambique.
Meanwhile Tanzania plans this month to resume talks aimed at kick-starting the construction of a planned $30 billion LNG export facility in the southeast African country, the head of the Tanzania Petroleum Development Corporation (TPDC) said Oct. 5, ahead of Oct. 28 presidential and parliamentary elections.
Shell, Norway 's Equinor, ExxonMobil, Indonesia 's MedcoEnergi and Singapore-based Pavilion Energy have been working to develop an LNG plant at Lindi, but talks with the government stalled last year.