The recent announcement from Shell Oil that it will not be seeking to commercially develop the oil field at the Graff 1X well as well as the 8 additional wells it drilled of the coast of Namibia, has been a blow to the aspirations of the country to become an oil producing nation.
The country currently possesses no commercial natural oil production and the discovery of gas and oil off the west coast would have been a massive boost to its economy and future prospects.
Shell has stated it will write down a loss of $400 million, for its exploration costs involved.
It appears that the porosity of the substrate as well as the high level of gas in the crude oil discovered makes it commercially unviable.
Prospects Still Being Developed
While stakeholders deem this as a ‘blow to the country,’ the African Energy Chamber (AEC), who serving as the voice of the African energy sector, has stated that it considers this merely a “speed bump in Namibia’s oil development rather than a road block”.
According to the AEC, Namibia still offers significant potential in the offshore Orange Basin and beyond, underscored by the other positive exploration campaigns currently underway.
Shell made headlines in 2022 with the discovery of the Graff-1X exploration well in PEL 39. Since this find, the company has drilled an additional 8 wells, namely La Rona-1X, Jonker-1X, Graff-1A, Lesedi-1X, Cullinan-1X, Jonker-1A, Jonker-2A and Enigma-1X. Situated 250 km in the deep offshore, PEL 39 covers 12,000 km² – twice the size of Namibia’s capital city Windhoek.
While subsurface complexities may exist, the current findings across the country are still promising. Moving further north, reservoir quality is expected to improve.
AEC believes that a more in-depth analysis of the data by the exploration team could uncover opportunities for a gas strategy, potentially revealing new possibilities.
Orange Basin Showing Potential
The northern Orange Basin region, particularly, still holds significant exploration prospects with potential for commercially viable discoveries, and leading international oil companies and independents continue to position the basin as one of the most sought-after exploration hotspots, with various exploration campaigns expected to yield strong results.
Energy giant, TotalEnergies, for example, is expected to make a final investment decision on its Orange Basin projects in 2025, following key discoveries.
The company currently operates two offshore exploration licenses in the Orange Basin, and is currently engaged in a multi-well appraisal and exploration drilling campaign in the one exploration Block, following the expansion of its interests in both blocks in 2024. The first commercial oil production has been targeted to commence in 2029.
Other players, including Woodside Energy, Galp and Rhino Resources are also involved in active exploration projects, exploring Namibia’s oil potential.
Woodside Energy is expected to become the operator of the PEL 87 block, following the approval of a permit and access to seismic data, and Galp has seen significant success offshore Namibia with two discoveries made at the Mopane complex. The company is seeking a farm-in partner, with Brazil’s Petrobras exploring the opportunity. Meanwhile, Rhino Resources will begin drilling activities at PEL 85 in Q1, 2025, with plans to drill two high-impact wells.
Walvis Basin Potential Explored
Namibian oil potential is also not limited to the Orange Basin area, and the Walvis Basin, that covers an area of 17,295 km² is one of the most prolific gas provinces worldwide.
There are several companies engaged in exploration activities, such as Eco Atlantic who are assessing opportunities for development, and Tower Resources who are conducting an oil seep analysis and review of existing volumetric data on existing prospects and leads.
Global Petroleum renewed its license for PEL 94 to September 2025, and is aiming to acquire, process and interpret 2,000 km of 3D seismic data. The company also plans to drill one well. Additionally, Chevron acquired an 80% operating interest in PEL 82 in the Walvis Basin in 2024.
Onshore, ReconAfrica is leading exploration in the Kavango Basin. The company confirmed the presence of an active petroleum system in November 2023 and seeks to obtain a 25-year production license following a discovery in PEL 73. The Kavango basin could likely hold as much as 30 billion barrels of oil, highlighting the potential across in-land basins.
AEC Confirms Support For Development
NJ Ayuk, Executive Chairman of the AEC has stated that: “There is no need for alarm. Exploration in these blocks is ongoing, and discoveries may need to be tied in with other finds within the basin. It’s worth noting that these blocks are massive, spanning up to 10,000 square kilometers – larger than some countries. Shell and other operators have only scratched the surface of the vast exploration opportunities available in Namibia. The country’s oil and gas story is still unfolding, and there’s so much more to come. The government has been a strong supporter of investment into the oil sector and has created a stable climate that makes Namibia a go to destination for investors.”
