Namibia's Oil Rush: In the Headlines
Who really gets to benefit from the oil boon?
BY CLAUDE MAXTON
Namibia has become a new Eldorado for oil explorers in search of untold wealth, especially after the Orange Basin started yielding up its black gold in recent months.
TO RECAP: There have been at least 16 oil drilling campaigns offshore Namibia since 2002, which have only gathered pace since Shell and TotalEnergies announced in 2022 their first major discoveries at Graff-1 (located about 270 km offshore Oranjemund) and Venus-1 nearby.
Then in 2023 Shell and TotalEnergies, partnering with QatarEnergy, announced another major find in the Jonker-1X well. Namcor has a 10% stake in PEL 39 (the petroleum exploration license for Block 2913A where the well is located and which stretches over 12,000 square km) while QatarEnergy and Shell hold 45% each.
PEL 39 has so far had seven wells drilled on it. Company analysts have claimed that Graff well could hold 2.38 billion barrels and Jonker-1X a further 2.5 billion barrels.
With over 5 billions of barrels of oil equivalent in their sights and more likely to be discovered, the prospect has attracted intense interest from global players, and the apparent success of these finds has since led to a surge in exploration activity, where several prospectors have secured exploration licenses and are active.
In January, petroleum commissioner Maggy Shino said that operators in and around the country had drilled 37 wells that came up dry before the latest discoveries: “Namibia has been on a roll since 2022, in that nearly every hole that has been drilled in the subsurface has yielded a positive indication of hydrocarbons. Between February 2022 and July 2023, we have had oil discoveries: the Graff-1, Jonker- 1X, La Rona-1 and Lesedi-1X discoveries in PEL 39 by Shell Namibia Upstream BV and its partners, and the Venus-1 discovery in PEL 56 by TotalEnergies EP Namibia and its partners.”
Recent developments at a glance:
Chevron is due to start exploration in 2024 after it signed a deal in April to take an 80% operating working interest in a block in the Walvis Basin. Chevron Namibia Exploration Ltd also has the license to PEL 90 in the Orange Basin.
Azule Energy, a JV between Italy's Eni and BP for their Angolan assets, and exploration firm Rhino Resources Namibia have agreed a farm-in agreement for a 42.5% interest in an offshore Orange Basin licence, the companies said in May.
Portuguese group GALP carried out tests at its Mopane-1X and Mopane-2X wells earlier this year and claimed the Mopane field could hold at least 10 billion barrels of oil. Galp has since launched the sale of half its stake. The company has an 80% stake in the PEL 83 block, while the remaining 20% is split between Namibian state firm Namcor and Sintana Energy's,Namibian outfit, Custos Energy.
TotalEnergies in January took a further 10.5% stake in Block 2913B and 9.39% in Block 2912 and is set to spend some 30% of its $1 billion exploration and appraisal budget in Namibia this year. On its offshore exploration blocks, Total owns a 40% working interest, while QatarEnergy, Impact Oil and Gas and Namcor each have stakes of 30%, 20%, and Namcor 10%. Source: Reuters
Looking ahead
The country has not yet produced any oil or gas, but Shino says, “The plan for the Namibian government, the international oil companies and our partners is to accelerate development of these discoveries and to see first oil in Namibia.” TotalEnergies and Shell are expecting to start extracting the estimated at 5.1 billion barrels at Venus 1 between 2029 and 2030
Oil giants like TotalEnergies are pushing for rapid development, with a Final Investment Decision (FID) on the Venus project expected in 2025. The planned multiple sub-sea wells and deployment of a FPSO (Floating Production, Storage and Offloading) vessel are seen as major developments in the local oil and gas industry, but back on land people are asking how the ordinary citizen will benefit from the discovery of this oil wealth. And at what cost does it come?
It would thus seem that Namibia is at a crossroads. The potential financial benefits of these discoveries are substantial, but so are the risks for a relatively backward economy with high levels of income inequality. How will the management of oil revenues benefit the population? Can we ensure stringent environmental regulations and monitoring? Can we diversify the economy to avoid over-reliance on petrodollars?
Namibia would do well to learn from other nations that have walked this path before.