ExxonMobil To Increase Oil Exploration Range In Namibia

According to a note from Standard Bank, stabilizing crude oil prices above $60 per barrel will backbone the investment in African oil and gas during the coming five years. That improved outlook could finally induce a discovery in Namibian oil exploration.

ExxonMobil said that it will expand its range of exploration in Namibia, adding about 28,000 square kilometers. It plans to initiate the exploration activity this year. 

Wood MacKenzie has mentioned that Total’s Venus-1 well offshore Namibia, which is expected to spud this year and is billed as Africa’s deepest ever, has the capability to throw up 2019’s biggest discovery. Smaller players such as Eco Atlantic Oil & Gas and Tower Resources are also active offshore Namibia.

The attention given for energy investment in Africa is set to shift, says Andrew Sekandi, an investment adviser at Alpha Sierra in London. He forecasts that interest will shift downstream to better storage, transportation and improved refining capacity in the coming years. Sekandi is expecting “slightly fewer interest in mature and legacy oilfields and abundant interest in frontier markets”. Namibia is potraying geological promise and is enticing more and more attention from juniors and majors, Sekandi says.

As per Standard Bank, the investment needed to bring in fresh African discoveries over the past decade in countries such as Niger, Mozambique and Ghana on stream will add even more momentum to Africa’s oil consumption, which already surpasses the continent’s refinery output. In the meanwhile, Namibia has historically remained under-explored. 

Seismically, Namibia may be homologous to the pre-salt fields offshore Brazil which have crude reserves summing to 16bn barrels, according to Sekandi, Brazilian petroleum giant Petrobras first discovered pre-salt oil reserves in the Santos Basin in 2006, and drew the first oil in 2008. Since then successive discoveries have continued. 

Researchers guided by Dr. Marcio Rocha Mello have stated that analysis of oil and condensates from Kudu and other wells proves that the Orange Basin off Namibia has similar source rocks to its northern neighbours, as well as Brazil, making the prospect of Namibian oil production a practical one. 

In September 2018, Tullow abandoned a well off the coast of Namibia, saying that the hydrocarbons found were non-commercial. Gas readings support the concept that there is a working oil system in the area. Namcor, the state-owned oil and gas explorer, said in 2018 that 48 offshore and onshore prospecting licences have been issued to Namibian and international oil and gas explorers. Eco Atlantic plans to start drilling between the third quarter of this year and the first quarter of 2020.

If oil is discovered in commercial quantities, Namibia’s low population density means it is likely to be able to extend better fiscal terms than others in Africa. Smaller explorers have not gotten lucky so far, but stimulated interest from ExxonMobil and Total, plus a pleasing price outlook, suggest that Namibia’s time may ultimately be approaching.