Oil Majors flock to Namibia as exploration reveals massive crude oil reserves

Namibia is attracting investment left, right and center thanks to promising oil discoveries in recent years, accelerating the growth of its burgeoning fossil fuel sector. In addition to oil and gas exploration plans, Namibia has also attracted millions in EU funding to develop its renewable energy industry, particularly green hydrogen. Rapidly increasing investment in Namibia’s energy sector could propel the south-west African country to become a major hub for fossil fuels and renewable energy, although contrary to the hopes of environmentalists, Namibia’s energy minister said the country would not be rushed into net zero carbon emissions.

More Oil and gas companies are investing in exploration activities in Namibia following numerous rough discoveries in recent years. TotalEnergies and Shell have made discoveries of an estimate 2.6 billion barrelsof crude oil and hopes to launch the country’s first production operations by the end of the decade. Discoveries have been made in the Orange Basin, as well as the Luderitz, Kavango and Walvis Basins, which have attracted several oil companies to the southwestern African country.

Chevron is expected to do start exploring this year after signing a development agreement in the spring for it to take an 80 percent operating interest in an offshore block in the Walvis Basin. Italian oil major Eni and BP’s joint venture Azule Energy, based in Angola, will work with Rhino Resources Namibia to carry out exploration activities in the Orange Basin. Portuguese energy firm Galp has already completed the first exploration phase of its Mopane-1X and Mopane-2X wells and appraisal the Mopane field could contain 10 billion barrels of crude oil or more. in total, 12 petroleum specializations have shown interest in Namibia’s oil assets to date.

At the beginning of the year, TotalEnergies agreed to buy an additional 10.5 percent interest in Block 2913B and a 9.39 percent interest in Block 2912 in the Orange Basin. It announced it would spend about 30 percent of its $1 billion exploration and appraisal budget in Namibia this year. Total has been operating in Namibia since 1964 and plans to finally start producing crude oil from the Venus 1-X well in Block 2913B, which is estimate to hold 5.2 billion barrels of oil by 2029.

Namibia currently has a debt of over 60% of GDP. However, based on recent oil discoveries and the accelerated development of its energy sector, analysts view the country’s economy as stable and expect the debt to stabilize in the medium term. Namibia already has a strong mineral export industry, generating revenue from the export of diamonds and rare earths. However, as more investment is earmarked to explore the country’s crude oil reserves, Namibia’s energy sector could overtake mining as the main economic driver. Charlie Robertson, head of macro strategy at FIM Partners, explicitly“Namibia’s per capita oil exports will look like a Gulf state in the 2040s, provided they are globally competitive…which should be positive for the country’s debt-to-GDP ratio.”

In addition to developing the fossil fuel industry, Namibia has also attracted investment to increase its renewable energy capacity. In September, the European Commission announced that it would provide significant funding to support the development of clean hydrogen and renewable energy in Namibia. The EU has pledged $55.1 million to support green hydrogen industries in Namibia and South Africa, to invest in production, transport and storage of the clean fuel. The EU and Germany also plan to provide $3 million in funding to Namibia’s Ministry of Mines and Energy to “help Namibia expand its renewable generation capacity and increase access by creating opportunities for decentralized solutions to renewable energy in remote areas”. conformable the Minister of Energy of the European Commission, Kadri Simson. A third business from Germany and the Netherlands will contribute $1.3 million in grants to the Green Hydrogen Program in Namibia. This is aimed at ensuring “the green hydrogen sector is driven and regulated by an effective support mechanism”, according to Simson. The recent agreements follow the creation of a roadmap for an EU-Namibia partnership on sustainable raw material value chains and renewable hydrogen last year.

Despite the promise of funding from the EU to help expand Namibia’s renewable energy capacity, Namibia’s Energy Minister Tom Alweendo has criticized calls from the Global North for Namibia to undergo an ecological transition. Alweendo stresses the need for oil and gas revenues to support industrialization and fight poverty in the southwest African country. This sentiment has been echoed by many other African states such as Ghanawho see the exploitation of their oil and gas assets as a means of achieving economic development in an unequal world. However, greater investment in Namibia’s green energy sector will help the country develop its renewable energy capacity and allow the African nation to diversify its energy mix to enhance its energy security in the coming decades.

By Felicity Bradstock for Oilprice.com

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