At the bustling port of Walvis Bay, Namibia, the signs of an impending economic boom are evident. Amidst the usual unloading of fish, Congolese sulfur and copper, a massive drilling segment is transported to a storage area.
The port is increasingly filling up with modern oil exploration equipment, alongside traditional cargo like raw minerals and imported used vehicles.
Major Oil Discoveries Fuel Excitement
Once all the drill segments are assembled, they will be deployed on a platform to explore for oil deep beneath the seabed.
Companies like TotalEnergies SE are leading the charge, with their exploration success potentially transforming the economic landscape of this southwest African nation.
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TotalEnergies, along with Shell Plc and Galp Energia SGPS SA, has made significant discoveries in the Atlantic Ocean, roughly 290 kilometers off the Namibian coast. Since early 2022, their drilling efforts have yielded oil in approximately 80% of cases, an exceptionally high success rate.
This success has ignited a wave of excitement, from the vibrant activity in Walvis Bay, which supports offshore drilling platforms, to boardrooms in the United States as other major oil companies seek a stake in this emerging oil province.
Namibia’s Vision for an Energy Hub
“We are preparing the country to become an energy hub for the region,” stated Maggy Shino, Namibia’s petroleum commissioner, at a conference in Windhoek, the capital.
She emphasized the potential for the oil discoveries to double or even triple the size of the economy, predicting “massive” activity in the coming years leading up to production.
Potential for a Guyanese-Style Boom
While Namibia is still in the early stages of development, with no discoveries declared commercially viable yet, TotalEnergies anticipates approving its first development at the Venus field later this year.
CEO Patrick Pouyanné has drawn parallels between Namibia’s potential and the oil boom witnessed in Guyana, suggesting a similar trajectory could be possible.
Guyana’s rapid economic growth, fueled by major Exxon Mobil Corp. discoveries, serves as an inspiring example. Its oil output is projected to reach 1.5 million barrels per day by 2029, a remarkable feat achieved within a decade of the industry’s takeoff.
Economic Transformation and Infrastructure Challenges
A comparable pace of development would be welcomed in Namibia, where officials are concerned that the oil discoveries might be too late for a world aiming for net-zero emissions by mid-century.
However, it would undoubtedly transform the nation’s economy, potentially doubling GDP by 2040 and elevating the status of a country that was largely under South African control before gaining independence.
Pouyanne envisions up to seven floating production vessels, each capable of producing around 180,000 barrels per day, operating in Namibia’s Orange Basin alone. However, significant infrastructure development is required before this vision can become a reality.
Ian Thom, an analyst at Wood Mackenzie Ltd, highlights the need for “massive infrastructure, all sorts of expansions, to develop these projects and support them throughout their lifecycle.” The consultancy is currently revising its estimate of Namibia’s recoverable resources, which previously stood at 7 billion barrels of oil equivalent but needs updating after the recent Galp discoveries.
Investments in Drilling Infrastructure
Namibia is taking steps to invest in the necessary infrastructure for drilling. Namport, a state-owned company, is developing plans to cater to both the oil industry and planned green hydrogen projects, with over $2.1 billion in port upgrades underway.
Walvis Bay already boasts a well-established ship repair industry offering fabrication, welding, and assembly services to explorers, according to Namport CEO Andrew Kanime.
Evidence of a Growing Industry
The oil industry’s expanding presence is visible beyond the ports. Workers in Schlumberger overalls frequent a hotel breakfast buffet in central Walvis Bay, and a Galp delegation plans to discuss opening a company office in the same town with Erongo Region Governor Neville Andre. He has also met with Chevron Corp. representatives.
Andre is assessing local infrastructure needs, including roads and the airport, as well as training opportunities. He acknowledges the magnitude of the oil and gas industry, noting that it’s a new frontier for Namibia in terms of exploitation.
Global Attention and Interest
Namibia’s escalating oil potential is attracting significant international attention and potentially multi-billion dollar contracts.
Oil executives mentioned Namibia even more frequently than Guyana during earnings calls in the last quarter, according to data compiled by Bloomberg.
OPEC Secretary General Haitham Al-Ghais expressed his excitement about a potential partnership with the country, which could one day surpass the output of many of the group’s African members.
Major Players and Future Prospects
Galp is considering selling part of its oil discovery, potentially containing up to 10 billion barrels and valued at around $20 billion. Exxon Mobil and Shell are among the energy giants exploring offers for the stake.
In April, Chevron acquired an operating stake in offshore block PEL 82, located north of other major discoveries. BP Plc and Eni SpA, through their joint venture Azule Energy, followed suit a month later with a stake 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.
Experts predict that major players like these will likely dominate Namibia’s nascent offshore industry due to the risk, complexity, and cost associated with deepwater operations, favoring those with the financial capacity to undertake such ventures.