Oil hunt heats up

Government’s response to the possibility of giant oil reserves offshore Namibia and the influx of interest it sparked has been reassuringly balanced so far, Cirrus Capital says.The analysts released an updated report on the deep sea discoveries of light oil by Shell and TotalEnergies earlier this year."The Orange Basin has quickly become one of the most exciting hydrocarbon plays in the region, as the discoveries have been rumoured to be among the largest African crude discoveries in recent decades," Cirrus says.Should Shell’s and TotalEnergies’ discoveries be commercially viable, investment flows into Namibia could be around US$29 billion, the international consultancy firm Wood Mackenzie estimates. At the current exchange rate, it would be around N$500 billion, close to three times Namibia’s nominal gross domestic product (GDP) last year.According to Wood Mackenzie, the Shell and TotalEnergies discoveries could potentially deliver about 6.5 billion barrels of oil, resulting in some N$60 billion in royalties and taxes flowing into state coffers annually.GROWING INTERESTCirrus points out that the discoveries have ignited increasing interest from other companies, including other majors.A new report by the independent research and business intelligence company, Rystad Energy, agrees. The online energy magazine, Offshore, refers to the report, saying recent high-profile exploration successes in Namibia have drawn the attention of majors and smaller players alike to the potential oil and gas riches in the country."As operators move ahead with plans to drill more wells, Rystad says smaller partners will need to decide whether to raise funding to take part in drilling or to sell their stakes to others with the requisite financial capacity," Offshore quoted the report this week."The rich resource base and favourable fiscal regime already have some comparing the Namibian success story to that of Guyana, which has unlocked significant oil volumes offshore," it continues.Reuters filed a report this week, also highlighting the similarities between Namibia and Guyana, a country on South America’s North Atlantic coast.It quoted Gail Anderson, research director for Sub-Saharan Africa at Wood Mackenzie: "It could be the next Guyana. The signals are very positive."SHIFTING GEARSMines and energy minister Tom Alweendo is currently at the Angola Oil&Gas (AOG) conference and exhibition in Luanda, where he will join a ministerial panel comprising his peers from Equatorial Guinea, the Democratic Republic of Congo, Senegal, Sierra Leone and Angola. The energy ministers will provide insights into Africa’s stance on exploiting its vast oil and gas resources.Meanwhile, the energy news website Upstream reported that Northern Ocean’s semi-submersible Deepsea Bollsta has arrived in Walvis Bay and is expected to start a three-well exploration and appraisal drilling campaign centred on its large Graff oil and gas discovery early in December.Shell has chartered the semisub on a 12-month contract and has an option to extend this deal for a further six months, according to Upstream. At least three appraisal wells are anticipated, says Cirrus.TotalEnergies has been forced to delay its appraisal drilling campaign on Venus because the drillship is tied up working for another major in Europe. The campaign is now expected to start around next February, targeting at least two appraisal wells over four months, Cirrus says.According to Upstream, TotalEnergies has lined up the drillship Tungsten Explorer for the Venus campaign. The website quotes Keith Hill, chief executive of Africa Oil, as saying TotalEnergies was also looking at chartering a second rig to operate in Namibia.SHELL, TOTALENERGIESCirrus highlights four major players in the current oil hunt offshore Namibia.In February this year, Shell successfully completed drilling its first exploration well (Graff-1) in PEL 39, confirming a working petroleum system and the presence of light oil.In April, Shell announced a second Orange Basin discovery, also in PEL 39, with the La Rona-1 well, where the well confirmed hydrocarbon plays at multiple levels. Beyond this, no information has been provided on the La Rona-1 well."There has been little further detail on Shell’s discovery, other than that the company is encouraged by the results so far. However, it was also cited as a ‘significant oil and gas discovery’."It is speculated that the Shell discoveries point to more substantial gas than oil volumes, with oil volumes more likely in the range of hundreds of millions of barrels (whether or not commercially extractable) compared to TotalEnergies’ rumoured billions of barrels," Cirrus comments.TotalEnergies, also in February this year, announced that it had discovered light oil at its Venus-1X well in the Orange Basin's block 2913B, just to the east of Shell’s Graff-1."It is rumoured to be a sizable discovery of light oil with associated gas, with speculation that this discovery has the potential to surpass Búzios offshore Brazil and could be one of the world’s largest deep-water finds," Cirrus says. Búzios oil field is a large ultra-deepwater oil field located in the Santos Basin, about 230 km off the coast of Rio de Janeiro.The analysts quote TotalEnergies CEO Patrick Pouyanne, saying: "The discovery in the southern part of the country seems to be a very large or even giant one based on the results from a single well."CHEVRON, GALPChevron announced in October that it acquired an 80% working interest in PEL 90 in the Orange Basin after concluding the agreement with Trago Energy (Pty) Ltd., the Namibian subsidiary of Sintana Energy Inc."It is rumored that Chevron paid in the region of USD$100 million (about N$1.8 billion) to acquire its stake," Cirrus says.PEL 90 is located directly above TotalEnergies’ Block 2913B, where the Venus-1X well was drilled.In early 2019, the Portuguese multinational energy corporation Galp Energia carried out a 3D seismic survey in PEL 83, which covers a region of about 3 000 km² above Shell’s PEL 39.According to Cirrus, the Portuguese major has secured an extension for its exploration license to drill a well next year in its block, which lies close to the TotalEnergies, Shell and Kudu discoveries in the Orange Basin.PEL 83 is located directly west of the Kudu Gas field, which BW Energy is still looking to exploit, and right above Block 2913A, where Shell plc made its Graff 1 light oil discovery. Additionally, Block 2913B, where TotalEnergies’ Venus-1X lies, is adjacent to PEL 83.GOVERNMENT STANCECirrus elaborates on its comment that government’s response to the oil discoveries has been reassuringly balanced so far, saying: "There appears to be a commitment to property rights, while government at this stage seems satisfied with the tax regime (35% corporate tax and the additional profit tax). Furthermore, there is no clear effort to increase direct interest in any projects beyond Namcor’s ongoing involvement." Namcor is the state-owned National Petroleum Corporation of Namibia."Given the transformative potential of revenues for the state from a commercial discovery, [a] balanced, pragmatic approach is vital to ensure development," Cirrus says.Although Namibia has a Petroleum Act in place, government is also looking to improve the regulatory framework – including for potential downstream industries, the analysts say."It was in this vein that Namibia has been engaging with Qatar to develop a national petroleum development strategy. The aim of this cooperation is to discuss matters on timelines, actions to be taken prior to potential production, shareholding structures, and the significance of skills development in Namibia's oil and gas sector."Given Qatar’s experience in oil and gas, the stated purpose is to ensure that Namibia has the best policies in place in terms of effective management of capital from oil and gas exploration and production. Qatar will also reportedly assist the Namibian government in areas of environmental management," Cirrus says.‘VERY OPTIMISTIC’Government has been very optimistic on the potential and progress of the offshore hydrocarbons, Cirrus points out, adding that media engagements by government officials often convey the belief that the oil discoveries are of a commercial nature, with ambitious timelines of production supposedly expected in the next four to six years.To date, there have been no official communications as to commerciality, Cirrus stresses."We believe that even if commercial viability is announced in the near term, production is at best six to eight years out. Nonetheless, confirmation of a commercial discovery would result in substantial investment inflows and a boost to economic growth even in the nearer term," the analysts say.NO GUARANTEEHowever, even if any of the discoveries prove commercially viable, there is no guarantee of further development, Cirrus emphasizes."Policy certainty is vital to protect investment, particularly the quantum needed to develop a petroleum field. This will require firm commitment to sensible policy, including on tax, property rights and local procurement."With growing political uncertainty, firms (especially the majors) will want assurance that any potential changes in political leadership will not adversely impact their investment. Given recent scandals within the ministry of mines and energy, and natural resources in general after the Fishrot exposé, increased transparency is warranted," Cirrus concludes.

Oil hunt heats up

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Republikein 2026-03-20

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Oil hunt heats up

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