Gas could dent Namibia’s oil dreams
Namibia’s dream of quick riches from various offshore oil discoveries could be shattered on account of a high gas-to-oil ratio in the oil reservoirs.
The gas content reportedly presents unexpected challenges as companies must now invest in additional infrastructure to process or reinject the gas due to a national ban on flaring.
Flaring and venting of associated gas are believed to materially contribute towards greenhouse gas emissions, negatively impacting the environment.
In July, TotalEnergies CEO Patrick Pouyanné expressed confidence, as quoted in a Bloomberg report, that Namibia would experience an oil boom similar to Guyana's.
The online news platform OilNOW noted that Bloomberg had quoted Maggy Shino, Namibia’s Petroleum Commissioner, as saying: “We are preparing the country to be an energy hub for the region.”
Bloomberg reported Namibia’s economy could potentially double or triple by 2027.
Complex operations
A recent Reuters report quoted Shino explaining that government is collaborating with operators, including Shell, TotalEnergies and Galp, to design a shared infrastructure plan that may involve an upscale version of the Kudu gas-to-power project. However, this added complexity could delay production well into the 2030s.
Both TotalEnergies and Shell have encountered difficulties related to the high costs of reinjecting gas, with Total's CEO indicating that achieving acceptable production costs is challenging. Shell is considering liquefied natural gas (LNG) production at its Graff discovery, though this would further increase costs and push back oil production timelines.
Assessing commercial viability
Instead of living the 'Guyana dream', the major oil companies are now focused on evaluating whether the projects remain commercially viable. As a result, Galp has delayed plans to sell part of its Namibian stake, while Chevron and Azule Energy-backed Rhino Resources are set to continue exploratory drilling in the region.
Shell CEO Wael Sawan told analysts last month that Namibia's acreage is "very challenging" and that the lower permeability of the rock made extracting oil and gas harder.
"A lot of our focus is on figuring out whether we can find ways to be able to develop commercially investable projects," Sawan added.
Galp, which has put half its Namibian stake up for auction, has postponed the sale pending results of additional exploratory drillings later this year. US major Chevron, as well as Rhino Resources, are also expected to drill in Namibia this year.
- Additional reporting by Reuters / Bloomberg
The gas content reportedly presents unexpected challenges as companies must now invest in additional infrastructure to process or reinject the gas due to a national ban on flaring.
Flaring and venting of associated gas are believed to materially contribute towards greenhouse gas emissions, negatively impacting the environment.
In July, TotalEnergies CEO Patrick Pouyanné expressed confidence, as quoted in a Bloomberg report, that Namibia would experience an oil boom similar to Guyana's.
The online news platform OilNOW noted that Bloomberg had quoted Maggy Shino, Namibia’s Petroleum Commissioner, as saying: “We are preparing the country to be an energy hub for the region.”
Bloomberg reported Namibia’s economy could potentially double or triple by 2027.
Complex operations
A recent Reuters report quoted Shino explaining that government is collaborating with operators, including Shell, TotalEnergies and Galp, to design a shared infrastructure plan that may involve an upscale version of the Kudu gas-to-power project. However, this added complexity could delay production well into the 2030s.
Both TotalEnergies and Shell have encountered difficulties related to the high costs of reinjecting gas, with Total's CEO indicating that achieving acceptable production costs is challenging. Shell is considering liquefied natural gas (LNG) production at its Graff discovery, though this would further increase costs and push back oil production timelines.
Assessing commercial viability
Instead of living the 'Guyana dream', the major oil companies are now focused on evaluating whether the projects remain commercially viable. As a result, Galp has delayed plans to sell part of its Namibian stake, while Chevron and Azule Energy-backed Rhino Resources are set to continue exploratory drilling in the region.
Shell CEO Wael Sawan told analysts last month that Namibia's acreage is "very challenging" and that the lower permeability of the rock made extracting oil and gas harder.
"A lot of our focus is on figuring out whether we can find ways to be able to develop commercially investable projects," Sawan added.
Galp, which has put half its Namibian stake up for auction, has postponed the sale pending results of additional exploratory drillings later this year. US major Chevron, as well as Rhino Resources, are also expected to drill in Namibia this year.
- Additional reporting by Reuters / Bloomberg
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