Following large discoveries of oil in the offshore Orange Basin, hope of enormous future oil revenue for the Namibian government is rising.
Just this week, the National Petroleum Corporation of Namibia (Namcor), with 10% carried interest, in conjunction with partners Galp Energia (80%, operator) and Custos (10%), announced a significant oil discovery in the Mopane-1X exploration well, situated in the PEL83, Orange Basin, offshore Namibia. Former interim Namcor managing director Shiwana Ndeunyema expressed great enthusiasm about this breakthrough.
“This is an amazing time for Namibia and Namcor. The Mopane-1X discovery is not just a significant achievement for our organisation, but also a beacon of hope for the entire nation’s economic future. We are immensely pleased with these results and excited about the potential opportunities this opens for our country,” he said before he left office on 10 January 2024.
On the announced discovery, Namcor noted that PEL 83 JV partners have now confirmed the discovery of a substantial column of light oil in high-quality, reservoir-bearing sands in the Cenomanian-Turonian interval.
“This is the second oil discovery in the Upper Cretaceous Orange Basin, demonstrating a working petroleum system in the Upper Cretaceous in addition to the proven hydrocarbon presence in the Lower Cretaceous by 2022 oil discoveries,” reads the statement.
This discovery, the state-owned entity said, is a pivotal moment in Namibia’s journey towards becoming an influential player in the global energy market. PEL 83 JV partners are set to continue the analysis of the acquired data, and plan to perform a Drill Stem Test (DST) in the coming weeks. This test is crucial for assessing the commercial potential of the discovery.
DST is a procedure for isolating and testing the pressure, permeability and productive capacity of a geological formation during the drilling of a well.
The Mopane-1X drilling operations will proceed to explore deeper targets within the block. Upon completion of these operations, the rig will relocate to the Mopane-2X site to further evaluate the extent of the discovery.
Meanwhile, energy economist David Jarrett says the discovery of light oil is another confirmation of the resources that Namibia holds, and its value to refiners.
“What is important now is for authorities to be ready to handle the benefits that can accrue, and it is time to hold discussions with other African oil producers to guide this pathway,” he advised. These significant offshore light oil discoveries are giving hope to many, but some researchers say this will not be a cure for the nation’s problems with a high youth unemployment rate, extreme poverty and inequality. Last year, Vetumbuavi Mungunda, the CEO of Ombu Capital and a former CEO of Standard Bank Namibia, observed that this is not a piece of cake, and that the emergence of single dominant sectors like oil and gas discoveries seems to exacerbate inequality, particularly when locals lack the necessary skills and capacity to participate.
“We are discussing the potential impact of oil finds on Namibia’s ability to overcome its issues. However, we discover high levels of inequality when we look at other nations, especially those which rely on oil activity.
We are currently unequal – and unless we make other plans, we are probably not going to diminish the inequality when the oil discoveries materialise,” he warned.