Off a busy dock in Namibia’s main port of Walvis Bay, the seeds of an economic boom are being planted.
As workers unload fish from boats or unload cargoes of Congolese sulfur and copper, a huge cylindrical drilling segment is hauled by an elongated trailer to a storage area. Between the more conventional loads of raw minerals and the imported used vehicles assigned to regional shippers, a lot is filling up with modern oil exploration equipment.
Once all the drill segments are collected, they will be loaded onto a platform and linked together to probe for oil deep in the seabed, at the behest of companies like TotalEnergies SE, whose exploration success could be about to transform the fortunes of the southwest African country.
The French oil giant, in collaboration with London-based Shell Plc and Portugal-based Galp Energia SGPS SA, has made major discoveries under the Atlantic Ocean, about 290 kilometers off the Namibian coast. Since the beginning of 2022, several wells drilled have produced oil in about 80% of cases, an almost unprecedented success rate.
It’s causing a certain frenzy — from the hustle and bustle in Walvis Bay, which supports several offshore drilling platforms, to boardrooms in Texas and California as other major oil companies seek to gain a foothold in the hottest new oil province.
“We are preparing the country to become an energy hub for the region,” which could potentially double or triple the size of the economy, Maggy Shino, Namibia’s petroleum commissioner, said at a conference in the capital Windhoek. “The volume of activity that we expect in Namibia in the 2025, 2026, 2027 horizon until production is massive.”
Namibia is still in its early stages and none of the discoveries in its waters have yet been declared commercially viable. But TotalEnergies expects to approve its first development at the Venus field later this year and its CEO Patrick Pouyanné has said the African country could one day experience a boom similar to the one happening across the Atlantic in French Guiana.
The Latin American country has become the world’s fastest-growing economy after major discoveries by Exxon Mobil Corp. Its output is expected to climb to 1.5 million barrels per day by 2029, just 10 years after its oil industry took off.
Such a pace of development would be welcome in Namibia, where officials fear that oil discoveries come too late for a world that aims to achieve net-zero carbon emissions by mid-century. It would also transform the country’s economy, potentially doubling GDP by 2040 and boosting the stature of a country that was largely controlled by South Africa for decades before its independence.
Pouyanne estimates that one day, up to seven floating production vessels, each with a capacity of about 180,000 barrels per day, could be operational in Namibia’s Orange Basin alone. But before that, the country has a lot of work to do to put in place the supporting infrastructure.
Namibia will need to “build huge infrastructure, all sorts of expansions, to develop these projects and support them through their lifecycle,” said Ian Thom, an analyst at Wood Mackenzie Ltd. The consultancy is currently revising its estimate of the country’s recoverable resources, which previously stood at 7 billion barrels of oil equivalent but needs to be updated following the Galp discoveries.
Namibia is starting to invest in the infrastructure needed for drilling. Namport, a state-owned company, is developing plans to serve both the oil industry and planned green hydrogen projects, with more than $2.1 billion in upgrades at its ports. Walvis Bay already has a well-established ship repair industry that provides explorers with fabrication, welding and assembly services, Namport CEO Andrew Kanime said in an interview.
A ship operated by Houston-based oil services company Halliburton Co., called the Stim Star Angola, recently occupied one of the port’s floating docks to offer repairs on oil services equipment. At another dock, the company is setting up a mobile plant to make slurry, a fluid essential to drilling operations.
Halliburton plans to employ and train Namibians to work at the plant, which is still awaiting environmental approval. U.S. rival Baker Hughes Co. will also build a sludge plant.
The smaller port of Luderitz, located further down the coast and closer to the discoveries, is currently just a base for TotalEnergies, Kanime said. One day, the port is also expected to play a larger role in supporting other companies’ drilling activities, he added.
The oil industry’s growing presence is also evident outside the ports. Workers in the overalls of oil services giant Schlumberger lined up at a hotel breakfast buffet in central Walvis Bay. A delegation from Galp planned to visit Erongo Region Governor Neville Andre to discuss opening a company office in the same town. He said he also met with representatives from Chevron Corp.
André is looking at local infrastructure that needs to be upgraded, including roads and the airport, as well as training opportunities. “Oil and gas is a huge industry,” he said. “It’s new for us as a country in terms of exploitation.”
Global interest
Namibia’s growing oil potential is beginning to attract serious international interest and potentially multi-billion dollar contracts.
Namibia was mentioned even more often than Guyana by oil executives on earnings calls in the latest quarter, according to data compiled by Bloomberg. OPEC Secretary General Haitham Al-Ghais said he was “excited” about a potential partnership with the country, which could one day eclipse the output of many of the group’s African members, such as Libya and Algeria.
Galp is looking to sell part of its oil discovery, which could contain up to 10 billion barrels and be worth about $20 billion. Exxon Mobil and Shell are among the energy giants exploring offers for the stake, according to people familiar with the matter.
In April, Chevron took an operating stake in offshore block PEL 82, located north of the other major discoveries. BP Plc and Eni SpA, through their joint venture Azule Energy, took a stake a month later in PEL 85, closer to the recent oil discoveries. TotalEnergies also increased its stake this year in the field where it made the Venus discovery.
It is likely that large companies like these will eventually dominate Namibia’s nascent offshore industry, according to Wood Mackenzie’s Thom.
“The risk and complexity of deepwater operations, the cost of a well, means you’re dealing with the biggest players with the deepest pockets who can drill,” he said.
Source: Bloomburg
