OPINION: Oil companies have struck oil three times in southern Namibian waters over the past year, making Namibia one of the hottest offshore oil exploration destinations in the world. The newest well, the Jonker-1X deepwater exploration well, is 270 km off the Namibian coast and 6,000 meters deep. Two more wells are being drilled now, and up to 10 more will be drilled this year. By year-end, Namibia may have as many as 5 or 6 fields having had exploration and appraisal wells drilled.
An industry insider predicts that in ten years, Namibia’s government receipts from oil and gas will exceed their current income and will be equivalent to those of Norway. South Africa’s prospects of finding similar fields are excellent as the geological trend where the discoveries are being made extends into South African waters.
The Orange Basin is a large geological feature off the west coasts of South Africa and Namibia, which could contain over 10 billion barrels of oil and over 50 trillion cubic feet (tcf) of gas. The Namibian discoveries are directly west of South African land but in Namibian waters because sea borders follow the line into the sea of the rivers that are land borders. Although the big finds have been in Namibian waters, the same geological features where they have been made stretch into South African waters.
The Orange Basin discoveries are new, but not the only major oil and gas fields in South African waters. The total has been assessed finds it made off the South Cape Coast four years ago in an area known as the Paddvissie Fairway where it sank the Brulpadda and Luiperd wells. These two are estimated to contain combined reserves of 3 TO 4 tcf of gas and up to 1 billion barrels of oil.
The Orange Basin could have an equivalent impact on South Africa’s economic health and social development as the diamond pipes at Kimberly, the Witwatersrand gold fields, and the Merensky Reef and Bushveld Complex.
The Kudu gas field was found in Namibian waters northwest of Oranjemund in 1974 but has not been seen as commercially attractive enough to be developed. However, early last year, Shell and Total announced the finding of oil and gas in the Graf and Venus fields, the development of which would allow the pipeline and distribution infrastructure that could be shared by Kudu.
It’s a common complaint that large international oil companies will “steal our resources and take them overseas.” However, the oil will be refined in refineries anywhere in the world that are most appropriate to its quality. The important figure to look at is the international standard that host governments, through various ownership, tax, and royalty schemes, get around OR in excess of 60% of the value of every barrel of oil produced. This could bring a lot of money into the government fiscus, which currently has significant gaps, and which means schools, hospitals, and roads cannot be properly funded.
Phindile Masangane, Chief Executive at the Petroleum Agency of South Africa (PASA), has been quoted as saying development of the Southern Cape field is expected to contribute up to $457 million per year towards South Africa’s government revenues, creating new opportunities for industrialization and socioeconomic growth on the back of energy independence.
Connecting Total’s new finds off Mossel Bay with the old Mossgas offshore infrastructure in three years could produce cheaper electricity than the diesel that is currently used. Cheaper fuel means longer running hours, which means more electricity. – Namibia Daily News