In September 2022, Namibia’s mines and energy minister said that discoveries made in the country by Shell and Total could be in the billions of barrels.
The two supermajors had been active in the Southern African country for a while, looking for crude and gas despite the rising tide of anti-oil sentiment in some of the world’s biggest consumers.
Fast-forward to this week, with Upstream Online reporting that the combined resources discovered by Shell and Total and Namibia have been estimated at 11 billion barrels of oil. There may well be a new star in the final frontier of oil.
But the supermajors are not the only ones looking for oil and gas in Namibia, which lies between Angola, one of the biggest legacy producers of oil on the continent, and South Africa. Earlier this week, another company, Global Petroleum, received an approval from the government to extend its exploration work offshore. The extension was contingent on results from previous exploration work, meaning those must have been quite promising.
Namibia’s claim to oil fame is called the Orange Basin, a deepwater basin where several significant discoveries were made in the past two years. Shell’s Graff-1X well, for instance, has reserves that Wood Mackenzie has estimated at 800 million barrels, the Africa Oil and Gas Report wrote recently.
Three more exploration wells followed for the Anglo-Dutch supermajor, with total reserves tapped estimated at 1.7 billion barrels of oil equivalent, per Barclays.
Meanwhile, TotalEnergies struck a reservoir that may contain as much as 3 billion barrels of oil equivalent with the Venus well that it completed in February this year. The reserve estimate comes from Barclays again. Related: Money Manager Sees $120 Oil Surprising Bears
It has been a while since a company made such potentially massive discoveries. In fact, besides Guyana, where Exxon, Hess, and CNOOC are making discovery after discovery, there has been a drought in large-scale new oil and gas discoveries. And that makes Namibia a venue worth keeping an eye on.
Namibia’s government is already preparing for the oil boom.
Earlier this month, Bloomberg reported the government was preparing a $2.1-billion expansion of a local port in order to turn it into an export terminal for oil. The money would be coming from private investors. According to the chief executive of the Namibian Port Authority, Andrew Kanime, the overhaul of the port could begin in late 2024 and will take no more than three years.
First oil in Namibia could flow in 2029, per the Namibian state oil company, Namcor, which is minority partner in Shell’s and TotalEnergies’ local ventures. By 2035, the country could be among the world’s 15 largest oil producers, Prime Minister Saara Kuungongelwa-Amadhila said this month at the Namibia Oil and Gas Conference.
“In the last 18 months, two light crude oil discoveries were made in Namibia, namely Venus and Graff, in the Orange Basin. The Venus discovery alone ranks as the second largest deep water oil discovery in the world since 2015 and if proven together with the other oil discoveries, has the potential to place Namibia in the top 15 oil producing countries by 2035,” Kuungongelwa-Amadhila said, as quoted by Zawya.
With a dearth of untapped oil and gas resources in jurisdictions that are not under sanctions, supermajors have a smaller pool of new exploration opportunities. Africa is part of this pool despite a push from the transition lobby against oil and gas exploration in the world’s lowest emitter of carbon dioxide.
Financial institutions such as the World Bank and the International Monetary Fund have hinted they would pull back finance for African countries if they approve hydrocarbon exploration activities and G7 members have also warned against betting on oil and gas—but with a few exceptions because more than half the G7 is in Europe where oil and gas are currently more scarce.
Namibia, then, has every chance to make its oil dream come true. Reserves of 11 billion barrels of oil and gas is an impressive amount—and potentially vital for the world economy. Because the global oil industry has been underinvesting in future supply for years now, prompting warnings that this has jeopardized future supply.
It is precisely because of this jeopardy that discoveries like the ones Shell and TotalEnergies have made in Namibia will likely draw a lot of attention in the coming years. Especially since the vast resources of Eastern Siberia, previously at the tip of the supermajors’ fingers, have now been locked behind a sanctions wall.
For all the political and lender opposition to new oil and gas production, the fact remains that even Green political leaders and bank executives need oil and gas in the form of their derivatives, on a daily basis. And to get them, the world needs more oil and gas discoveries like the ones Shell and TotalEnergies have made in Namibia over the past two years.
By Irina Slav for Oilprice.com
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