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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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Namibia Is Gearing Up for a Major Oil Boom

  • Namibia's past oil exploration attempts failed, but recent discoveries suggest billions of barrels of oil reserves.
  • Major oil companies like Shell, TotalEnergies, Exxon, and Chevron are vying for a stake in Namibia's oil fields.
  • Production could begin by 2030, potentially transforming Namibia's economy.
Oil Boom

Namibia’s nascent oil industry is going from strength to strength following several discoveries that have provided great enthusiasm around the future of Namibian oil. The recent success of the industry is somewhat surprising considering the failed exploration projects of previous decades. Based on several new finds, energy experts believe that Namibia could quickly become as big as Guyana in terms of its crude reserves, which has gained it huge interest from local and international oil companies. 

There has been little interest in Namibian oil in recent decades due to failed exploration projects in the Southwest African Coastal Basin spanning Namibia and South Africa in the 1970s and 1980s. Chevron initially made a gas discovery in the Kudu gas field in 1974, but two failed attempts to find more led the oil major to give up. However, Shell and TotalEnergies both made significant discoveries in the Orange sub-basin in 2022, and the region is now thought to hold billions of barrels of crude, making it a hotspot for new investment. 

Namibia is one of Africa’s poorest countries, but, through the development of its oil industry, its natural resources provide massive revenues for decades to come. At present, several oil majors and smaller firms are battling for a stake in the industry, as many fossil fuel producers move away from long-established oil regions to newer fields where they can develop “lower carbon” oil projects, eyeing Africa and the Caribbean in particular.

By the end of last year, Shell had drilled seven appraisal wells and TotalEnergies had drilled three. While two of these wells were dry, the oil majors did find hydrocarbons, although not in commercial quantities. The firms carrying out exploration activities in the Orange Basin have mainly kept quiet about their findings in Namibia as interest in the region has boomed over the past two years. 

In January, the Portuguese oil company Galp started exploration drilling in license Petroleum Exploration Licence (PEL) 83 off the coast of Namibia, close to Shell’s Graff and TotalEnergies’ Venus discoveries. Around a week into exploration Galp made its first find, announcing a light oil discovery at the Mopane-1X exploratory well in the Orange Basin. In March, Galp announced it had made another discovery in license PEL 83, offering greater optimism for the basin’s potential. 

Maggy Shino, the Petroleum Commissioner for the Ministry of Mines and Energy, stated, “The announcement of another significant discovery and the appraisal success at the upper target is further testament to the hard work and dedication of the partners involved, as well as another demonstration of the potential for further growth in our oil industry. With this discovery, we are one step closer to harnessing the full potential of this campaign. We are proud to have achieved this milestone.”

Galp announced in April that initial reviews of the first phase of its exploration in the Mopane field showed it could contain at least 10 billion barrels of oil. Throughout its exploration drilling, the firm found significant light oil columns discovered in high-quality reservoir sands. This news sent Galp’s stocks up by around 20%. The find could be comparable to that of Guyana, a region that has attracted interest from several oil majors in recent years. Namibia’s national oil company NAMCOR and the independent exploration group Custos each hold a 10 percent stake in the field. 

Now, there is significant competition for a 40 percent stake in Galp’s Mopane oil and gas discovery, with several Western oil majors thought to be assessing the potential of the project. Galp plans to cede control of project development to an energy company with operational experience. Exxon and Shell are among the companies eyeing the field, as well as TotalEnergies, Equinor, and several other oil and gas companies. The entire discovery could be worth $20 billion or more, based on initial estimates. The 10-billion-barrel estimate in the basin is based on initial drilling activities, with the potential for even more finds. The first round of bids is expected to come in this month. 

Shell and TotalEnergies have also made discoveries of an estimated 2.6 billion barrels of crude, with production expected to commence around 2030. This will be the first oil production in the South African country, with much more expected to follow based on recent exploration successes. Meanwhile, Chevron is expected to begin exploration activities in the region later this year after signing a development deal in April to take an 80 percent operating working interest in an offshore block in the Walvis Basin. It also operates PEL 90 in the Orange Basin. Azule Energy, a joint venture between Italy's Eni and BP, and the exploration firm Rhino Resources Namibia also signed a deal to manage a 42.5 percent stake in an offshore Orange Basin license.

Following the exploration failures of previous decades, there is finally greater hope around the potential for Namibia’s future in oil. Several discoveries across a range of exploration projects suggest that the South African country could hold billions of barrels of crude reserves, making it attractive for lower-carbon oil output. Production activities could commence as soon as 2030 and run for as long as oil demand remains high.

By Felicity Bradstock for Oilprice.com

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