WALVIS BAY, November 25 — Namibia has recently experienced substantial oil discoveries off its coast, sparking enthusiasm among industry experts and signalling a potential transformation for the country’s economy. Ian Thom, Upstream Research Director at Wood Mackenzie, highlighted the remarkable potential of these discoveries in an opinion piece on the company’s website.
Thom underscored the anticipated scale and quality of these reserves, predicting significant cash flows that could position Namibia as a key region for major international oil companies (IOCs). While exploration in Namibia’s offshore regions dates back to the 1970s, the breakthrough occurred in February 2022 with major discoveries in the Graff and Venus blocks by Shell and TotalEnergies.
The Venus discovery, in particular, is estimated to be the largest oil find in Sub-Saharan Africa and ranks among the top 10 global discoveries since the turn of the century. Namibia’s licensed acreage covers 230,000 square kilometres, surpassing even Norway’s 100,000 square kilometres.
Highlighting that the area remains largely unexplored, with fewer than 20 deepwater wells compared to thousands in regions like the North Sea or the Gulf of Mexico, Thom suggested the potential for further discoveries and resource upgrades, placing Namibia alongside other frontier deepwater hotspots like Guyana, Suriname, and Senegal.
While the basin is still in the early stages of exploration, Thom acknowledged the necessity for more wells to enhance understanding of subsurface conditions. Uncertainties persist regarding field development, including design concepts, timing, production levels, and gas handling strategies.
Despite these uncertainties, Wood Mackenzie’s modelling indicates that project economics should remain robust at oil prices of $60 per barrel. Even at prices as low as $40 per barrel, the net present value (NPV) remains positive.
Thom projected that if upcoming appraisal and well flow tests prove successful, Namibia’s oil production could surpass 500,000 barrels per day within a decade, triggering unprecedented upstream investments of up to $4 billion annually in the first half of the next decade.
Gas monetization poses a more complex challenge due to the ultra-deep water location, seabed topography, offshore conditions, gas quality, limited local market, and infrastructure constraints. The initial preference for reinjection may capitalize on higher oil returns.
Operators are likely to adopt a multi-phase development concept, initially utilizing floating production storage and offloading (FPSO) installations. Subsequent phases could involve drilling over 100 subsea wells, comprising producers and water and gas injectors.
Thom concluded that Namibia is emerging as a core region for major oil companies, with expected NPVs positioning projects as potential crown jewels for several major operators.
While these oil discoveries offer immense promise for Namibia’s economic development, potentially generating significant revenue, creating jobs, and fostering infrastructure improvements, careful planning and management will be crucial to ensure equitable and sustainable sharing of the benefits.