Original article by PetroEdge

When Shell (or rather, Royal Dutch Shell as it was known then) discovered oil in the Niger Delta, the results for West Africa was transformative. Exploration funds poured in, and found plenty of oil waiting. Cameroon, Ghana, Cote d’Ivoire, Mauritania… all joined the list of oil-producing nations, with a few being so rich in oil resources that they ascended to the ranks of OPEC – Nigeria, Angola, Equatorial Guinea, Congo and Gabon. Look at a map of West Africa and you’ll see a crescent of offshore oil and gas producing fields hugging the coastline from Cote d’Ivoire to Angola. And then, immediately south of Angola in Namibia, it stops.

That quiet stretch of sea might change soon. Announcements from Shell and TotalEnergies that oil had been struck in two separate discoveries off the coast of Namibia herald a potential gamechanger, with estimates suggesting up to 4 billion barrels of oil in place between the two. And, even more exciting, there are signs that this is potentially just the tip of the iceberg.

If there truly are blockbuster reservoirs waiting to be found off Namibia, why did it take so long? Especially when its neighbours to the north have been enjoying an oil revenue bonanza. Intent doesn’t seem to be the issue. Offshore drilling has been attempted for decades. The Kudu gas field was discovered by TotalEnergies back in 1974, when Namibia was still under the rule of South Africa. Independence for the country came in 1990, but no major progress came in hydrocarbon exploration. The Kudu gas field remains undeveloped to this day, with Namibia’s economy revolving around onshore mining of uranium, gold and diamonds.

The answer, it seems, is in geography. The waters off the coast of Namibia run deep, with technology only recently allowing exploration to go that far down. Potential hydrocarbon reservoirs in Namibia’s Walvis and Orange basins lie in some of the deepest waters below sea level. In comparison, West Africa’s oil and gas boom started with shallow water discoveries; to this date, over 90% of Angola’s production comes from its shallow water blocks at depths of less than five hundred metres. Only recently has exploration and production moved deeper into the Atlantic Ocean, with has paid off in discoveries such as the Jubilee field in Ghana and the Dalia field in Angola. Namibia has not had the luxury of that gradual evolution. Also, at those depths, fixed oil rigs are not an option, with the only alternative for explorers to commercialise potential finds being floating platforms that have to contend with the turbulent waters and winds of the southern Atlantic. This was the dilemma faced by Chariot Oil & Gas as it explored the potential of its Tapir prospect field in the offshore Namibe basin, but dry holes and soaring infrastructure costs led to the abandonment.

But geography might also be the reason why Namibia could be on the cusp of an oil treasure trove. And for that, you have to look at what is across the Atlantic to Brazil and Guyana. Exploration in the deepwater sub-salt Santos basin yielded the Tupi field in 2006, and since then Brazil has gone from strength to strength as a major oil producer. More recently, Guyana’s treasure trove of continuous oil discoveries were based on similar deepwater geologies. Why does that matter for Namibia? Because, some 200 million years ago, South America and Africa were parts of the super-continent Gondwanaland. Seismic studies suggest that Namibia’s offshore area is the African counterpart of Brazil’s Santos and Campos basins. And the Brulpadda discovery in South Africa at depths of up to 3,633 metres suggests that deepwater technology is now at a stage to allow Namibia centre stage.

Several major explorers, including BP and Petrobras have been poking away with the latest deepwater tech over the last decade. But it was only in 2022 that aspirations were confirmed. In February, Shell announced a major find at its Graff-1 well, with an initial estimate that it contains some 400 million barrels of oil. Estimates from Namcor – Namibia’s state oil company and Shell’s junior partner in Block 2913A – are even higher, at up to a million barrels of resources with nearly 700 million barrels recoverable. Many have called it a ‘game changer’, breaking a 48-year streak of dry well. Shell is now estimating production to begin in 2027 via FPSO at a peak rate of 19,000 b/d, which could be much more if Shell’s upcoming second drilling campaign this year yields more finds, with the wildcat at La Rona-1 holding promise.

If Shell’s Graff discovery was ‘major’, then TotalEnergies’ Venus discovery was ‘magnificent’. From a well drilled at depths of 6296 metres at Block 2913B next to Shell’s discovery, Venus is an ultra-deepwater discovery that shatters several records. TotalEnergies has been coy about the prospects, but internal reports suggest it has at least 3 billion barrels of recoverable oil. This would make it the biggest deepwater discovery ever, taking the crown from Buzios in Brazil and the largest ever in sub-Saharan Africa. This could support production of up to 250,000 b/d via FPSO from Venus alone by 2028, with a ‘significant’ amount of natural gas in place as well. Predictably, this has set off an interest and bidding frenzy for areas in the Orange Basin, with Namibia preparing for the upcoming rush by launching a sovereign wealth fund to fund infrastructure and national development in other areas.

Since its initial discovery at Liza, Guyana has been on a continuous streak of major finds, each lifting the ceiling for its potential production to (a current) 1 mmb/d. Namibia could be on a similar trajectory, with its initial finds being even higher than Liza-1’s 1.5 boe/d and spread across two blocks by two operators instead of one. Namibia looks like it could be the next deep-water exploration hotspot and potentially become the third-largest producer in sub-Saharan Africa within a decade. Wild potential for a country of only 2.5 million people.

That’s very exciting and all, but the climate on hydrocarbon exploration has changed. Both Shell and TotalEnergies are seen as leading proponents of energy transition, with Shell even being (currently) legally obliged to accelerate its decarbonisation programme. To invest in expanding hydrocarbon production when both companies had net-zero targets would require careful recalibration of their communications, as activists push back.

It is also going to be a balancing act for Namibia, which has intentions of developing itself into a green hydrogen leader within Africa, having signed a US$9.4 billion plan to use its huge solar and wind power potential. Balancing clean energy credentials with its new hydrocarbon darling status will not just draw flak from the environmental lobby, it also brings in the risk of exacerbating inequality in one of Africa’s most unequal countries for income distribution. Namibia also pledged to reduced its greenhouse gas emissions by 91% through 2026 at COP26, which is now unrealistic. Graff and Venus could revitalise Namibia’s economy and benefit its people, if done right. And it is likely that Namibia, like Guyana, will be one of the last of its kind, as the window for energy exploration in new frontier areas close rapidly as net zero accelerates.

KeyFacts Energy Industry Directory: PetroEdge