By YANGE IKYAA
The National Petroleum Corporation of Namibia (NAMCOR), alongside partners Shell Namibia Upstream B.V. and Qatar Energy, have announced the discovery of sizeable quantities of light oil in both primary and secondary targets at the Graff-1 well offshore Namibia, ushering in a new era of hydrocarbon exploration and production for the country.
This discovery, coupled with the country’s favorable regulatory environment, is set to create an influx in new investment, while further positioning Namibia as a highly competitive and increasingly lucrative upstream destination.
Representing one of Africa’s final frontiers for oil and gas exploration, potentially rich basins across Namibia have spurred the appetite of regional and international oil companies (IOC) alike, leading to a succession of exploration campaigns in recent years.
The most notable include an ongoing drilling campaign by Reconnaissance Energy Africa, which has already indicated that Namibia’s 6.3 million-acre Kavango Basin may hold billions of barrels of oil, in addition to Shell’s 2022 discovery.
Located in the Orange Basin offshore Namibia, 270 kilometers from the town of Oranjemund, drilling operations on the Graff-1 well commenced in December 2021 and were completed in February 2022. Owned by Shell (45%) as the operator, Qatar Petroleum (45%), and NAMCOR (10%), the discovery will play a significant part in the country’s overall energy and economic transformation.
What this recent discovery means for Namibia and its people is that, firstly, regarding the country’s energy future, the discovery is set to usher in a wave of new investments across the entire energy value chain. With Namibia’s energy sector considerably undeveloped, capital injections in key industries such as infrastructure, power generation and distribution and production will soon follow as investors turn an eye to this highly potential market.
Secondly, once developed, this discovery will significantly improve energy security in a nation that relies heavily on petroleum imports and intermittent hydropower. The development of a consistent domestic energy supply will prove critical for the country’s economy, while reducing imports from neighboring countries.
Moreover, the discovery will serve as a catalyst for enhanced economic growth in the southern African nation. Notably, the creation of a domestic petroleum market will provide thousands of jobs for the local population across every industry in the value chain, while motivating the creation and establishment of various domestic companies.
In developing a petroleum market, the country will require numerous service companies, thus, creating newfound opportunities for the population. Additionally, the discovery will initiate growth across various sub-sectors of the economy, including but not limited to transportation, as well as education, through technical training and skills transfer, infrastructure and industrialization. This will be critical for the country as it pursues an economic recovery in a post-COVID-19 landscape.
“Credit is due to Shell and partners for sticking with their drilling campaign in an environment where frontier exploration drilling fell to the lowest level ever recorded in Africa. Many majors have not had a long term approach rather they have instead focused on quicker return. Shell has shown resilience and commitment to Namibia which is a good thing,” states NJ Ayuk, Executive Chairman, African Energy Chamber.
According to him, “the resource is large, the unit cost for producing in Namibia should not be too high, and I am confident Shell has the skill set and technology to operate this field in a low-carbon environment.
“H.E. Tom Alweendo, the Minister of Mines and Energy, Petroleum Commission, NAMCOR and other Namibian authorities have been very pragmatic in their approach with energy companies, and it is commendable. They have learned a lot from the mistakes of others, and we are confident they will get it right, especially on fast tracking field development decisions, pragmatic local content and ensuring that the resources improve the living conditions of their citizens.
Even though they’re up against a lot, they have a lot of partners who are going to support them. I believe Namibia and many African countries will see more drilling of high-impact oil and gas prospects which is very good as these resources are needed to make energy poverty history.”
Namibia has already made a strong play for investment at continental energy conferences such as African Energy Week (AEW) 2021. Now, backed by this exciting discovery, the country is well positioned to drive new investment and development across its energy landscape.
At the second edition of AEW in Cape Town from October 18 to 21, Namibia is expected to take a leading role in hydrocarbon dialogue, promoting the country’s rich resources, upstream potential, and competitive edge.
AEW 2022 remains focused on alleviating energy poverty, recognizing the role oil and gas will play in achieving this objective. As international hydrocarbon explorers and producers make their way towards lucrative frontier markets such as Namibia, AEW 2022 will be the platform to sign deals, form partnerships, and network and engage with a number of global and African stakeholders.
