Will Namibia Become OPEC’s Newest Member?

• Two discoveries in particular—Shell's Graff and TotalEnergies' Venus—could transform the country into not only a new oil producer but a major one.
• Namibia wants to join OPEC as it prepares to reap the benefits of its crude oil resources.
• A potential Namibia membership may add 700,000 bpd to OPEC's numbers.

Namibia wants to join OPEC as it prepares to reap the benefits of its crude oil resources, with daily production capacity seen at an impressive 700,000 bpd in 2030—the first year of production per current plans. OPEC, it seems, will be only too happy to welcome it in the fold.

OPEC has created "great value" in "ensuring that the dynamics of the market are controlled and managed in a sustainable manner," Namibia's Petroleum Commissioner Maggy Shino said at a recent online event, suggesting the southwest African nation would be happy to join the oil group. Reports said that the two had already started discussing Namibia's membership.

Reuters, meanwhile, cited unnamed sources and the executive chairman of the African Energy Chamber as saying that OPEC very much wants Namibia to become a member. At first, the country could become a member of the OPEC Charter of Cooperation, these sources told Reuters, and then move on to full membership. Brazil joined the Charter of Cooperation earlier this year, the report recalls.

According to the African Energy Chamber's NJ Ayuk, OPEC has started "a charm offensive" on Namibia. According to Namibia's Minister of Mines and Energy, there were no talks about the country joining OPEC.

"We haven't been approached by anyone to join OPEC. OPEC members are petroleum exporting countries and we are not there yet," Tom Alweendo said, as quoted by Reuters. "That is a consideration only after we have started to produce."

This is going to happen quite soon, per plans. Supermajors have tapped an estimated 11 billion barrels of oil in offshore resources, with first production is seen in 2030. Shell and TotalEnergies are the leading investors in Namibia's oil future, along with Qatar Energy and a UK-listed Australian driller by the name of Global Petroleum. Chevron, Portugal's Galp, and Rhino Resources are also exploring for oil in the country's Orange Basin.

Two discoveries in particular—Shell's Graff and TotalEnergies' Venus—could transform the country into not only a new oil producer but a major one, as they are estimated to contain billions of barrels in oil and gas.

The Graff discovery could hold as much as 1.7 billion barrels of oil and gas across three wells, according to Barclays estimates. The Venus discovery is even bigger, with reserves seen at up to 3 billion barrels of oil equivalent.

"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," Namibia's Prime Minister, Saara Kuungongelwa-Amadhila, said last year.

This potential certainly makes Namibia an attractive new target for OPEC membership. The cartel already accounts for a solid portion of global oil production. This portion rose substantially when Russia and the Central Asian producers joined in with OPEC+. Then Angola left, costing OPEC some 1.1 million bpd in production. Namibia could basically fill that gap, albeit not entirely. Besides, Angola may well come back, as has happened with other OPEC members in the past.

It seems, then, that there are two willing potential partners, and the tie-up is only a matter of time. Such a tie-up would add 700,000 bpd to OPEC's total, which could grow further, too, if additional exploration yields results. Namibia joining the group would strengthen OPEC's hand in future price control moves—which is the point of adding new members in the first place.

By Irina Slav for Oilprice.com

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