Paula Luckhoff4 July 2024 | 17:32

After huge investment, TotalEnergies 'ditching' SA offshore gas finds for Namibia coast

Our neighbours Namibia and Mozambique win with more policy certainty, says Wits Business School's Lumkile Mondi on The Money Show.

After huge investment, TotalEnergies 'ditching' SA offshore gas finds for Namibia coast

TotalEnergies gas platform. Image: Facebook

Growing concern is being reported about the future of domestic investment by foreign oil companies, with the blame squarely placed on government.

Bloomberg News reports that TotalEnergies plans to exit its discoveries of gas-condensate offshore South Africa to prioritise exploration in other areas closer to Namibia, 'according to people familiar with the matter'.

The French oil giant has invested a reported  $400 million since discovering the first of two large mainly gas finds in Block 11B/12B offshore the southern coast in 2019.

Ray White gets some context from Lumkile Mondi, senior lecturer at Wits Business School.

Mondi notes that the southern African region is richly stocked with fossil resources, citing Namibia and the Rovuma project off Mozambique, where there has also been massive international investment.

In these neighbouring countries of ours, he says, governments have ensured that their resources can be exploited at a lower cost.

Even more importantly, he adds, decision making there is more straightforward.

"In comparison, South Africa has just struggled to reach policy certainty... It's costly to exploit these resources... in an environment of policy uncertainty, therefore you go to an environment that's easier."
"It's a huge concern for us that as long as SA continues to have policy uncertainty and long processes of consultation and various requirements related to black economic empowerment in a capital intensive industry, we're going to miss the boat."
"I think countries around us that are highly competitive like Namibia and Mozambique, are going to eat us alive."
Lumkile Mondi,Senior Lecturer - Wits Business School

At the same time, considering how far our neighbours have advanced along this road, it would probably be a lot more efficient for South Africa to just work with them in terms of gas requirements, he says.

Listen to the conversation at the top of the article