Namibia cautioned not to count oil riches just yet
Ambitious targets a danger, Total says
Oil discoveries off Namibia's coast can potentially double Namibia's economy.
Head of TotalEnergies Namibia Laurent Roche says policymakers should be modest in their estimates of what future revenues could be generated, cautioning that there is no guarantee Namibia will become an oil and gas producing country.Roche made the remarks during an Institute of Public Policy and Research (IPPR) discussion on the extractive industries in conjunction with the Extractive Industries Transparency Initiative (ETTI).
Estimates provided thus far indicate that Namibia’s economy could double because of its oil and gas discoveries. Airing his take, Roche said it is still early days.
“Be careful of big figures, it is still early days. The projects are not yet in production,” Roche said.
While acknowledging that the discoveries may indicate the presence of hydrocarbons, he emphasised that development would be significantly difficult and take a long time.
“With Venus and X-1, it was proven there are hydrocarbons in the Orange Basin. In Namibia, it’s quite complex; it could take several years, there is no clear timeline,” he said.
Total commits to exploration spend
The French supermajor and Shell are driving Namibia's emergence as an oil and gas producer, having made initial vast discoveries in the Orange Basin in 2022, according to S&P Global.
TotalEnergies spent 50% of its exploration budget for 2023 in Namibia, it said, and will spend about 30% of its US$1 billion exploration and appraisal budget in 2024.
Last year, it reported "positive results" at its marquee Venus-1A appraisal well – widely seen by investors and analysts as a gauge of the prospectivity of the wider basin – and carried out two flow tests.
TotalEnergies CEO Patirick Pouyanne said the company had "a very good drill stem test on one of the Venus wells," while the location of the second was "imperfect."
Amid reports of an oil find at Mangetti, which sits just north of Venus, Pouyanne said in February that the oil and gas major had found "some hydrocarbons" but added it was "not huge."
In the same month, the French company entered into a joint venture with Vantage Drilling International, giving it a 75% stake in the Tungsten Explorer drillship – which it is using to drill the Mangetti well – for US$199 million.
Window of opportunity
Gilbert Makore of the ETTI Secretariat echoed Roche’s sentiments, saying countries such as Ghana made the mistake of overestimating future revenue earnings in the absence of production. According to him, the estimates provided indicate that Namibia could see investments in its oil and gas industry of US$1 billion from 2025 up to US$5 billion.
“Namibia can see production of 500 000 barrels per day from 2030; this can be a significant windfall," Makore said.
“There is always overestimation in terms of oil revenue,” he added.
While advising caution, Makore said Namibia has a window of opportunity.
“There is a window of opportunity to benefit. It is an opportunity to ensure countries can earn optimally from their resources,” he said.