QP farm-in throws spotlight on Namibian potential
The Qatari NOC is betting on the promise of Total’s Orange Basin play
A farm-in by Qatar Petroleum (QP) on acreage operated by Total in Namibia is the latest in a series of similar tie-ups between the two firms around the world. But it also reflects hopes that Namibia’s share of the Orange Basin, which straddles the border with South Africa, could be on the brink of becoming a major oil play.
QP is to take a 30pc interest in Block 2913B, leaving Total with a 40pc holding. The other partners are Impact Oil and Gas (20pc), and state oil firm Namcor (10pc). On the adjacent Block 2912, QP will hold a 28.33pc stake, Total will hold 37.78pc, Impact Oil 18.89pc and Namcor 15pc. The deals are subject to approvals by Namibian regulators and the partners.
Early attention will be focused on Block 2913B, where an exploration well is now scheduled to be drilled in the first half of next year. The Venus-1 well is targeting a large basin floor fan in some 3,000 metres of water, which Impact has said would probably be the deepest well to be drilled in Africa and which data analysed so far suggests could be in a multi-billion-barrel play.
"This large prospect is located much further offshore, in a different structural domain, than previous wells and is testing a new play concept. Success would reduce the play risk for adjacent acreage holders, including Shell, and would have wider significance for exploration in deep water in Namibia," according to Vikesh Mistry, an upstream analyst at consultancy Westwood Energy.
"Success would reduce the play risk for adjacent acreage holders, including Shell, and would have wider significance for exploration in deep water in Namibia," Vikesh Mistry, Westwood Energy
Despite geological similarities between the Namibian offshore and the oil-prone rock of offshore Brazil and Argentina, Namibia has yet to produce a commercialised oil or gas find in decades of exploration, during which more than 30 wells have been drilled.
The Kudu gasfield, some 150km east of Block 2913B, was discovered in 1974, but to date no company, including current operator BW Offshore, has been able to commercialise its estimated 2C contingent gas resources of 1.33bn ft3.
Recent failed exploration wells have hardly helped boost the prospectivity of Namibia’s offshore. Tullow’s Cormorant-1 wildcat further north on the PEL-37 license in the Walvis Basin and Chariot Oil & Gas' Prospect S well also off central Namibia were the latest to come up dry, when they were drilled in the second half of 2018.
Despite the failures, Namibia continues to draw in the big guns. In April, ExxonMobil increased its Namibian exploration acreage, adding 28,000km2 in the Namibe Basin in the north, where it plans to carry out seismic acquisition. Shell, Tullow and Galp are among others present.
That the industry’s heavy hitters have a positive view of Namibia’s potential could augur well for future exploration. "If I were to pick two explorers as being the ones to watch anywhere in the world right now, they would be Total and ExxonMobil. They are both companies with significant footprints in the Namibian offshore," says Andrew Latham, an exploration research analyst at Wood Mackenzie.
3,000 metres - Water depth above Block 2913B
Others are also primed to boost exploration in coming months. Analysts say four or five wells could be drilled in Namibian waters in the next 18 months by firms including Maurel and Prom and Shell. One reason for the continued optimism is that, while scores of wells have been drilled, Namibia remains relatively underexplored, given the extent of acreage extending out from its 1,500km of coastline.
Latham says Namibia’s fiscal regime and investment climate is attractive enough to make discoveries greater than approximately 200m barrels commercially viable, on a standalone basis at current oil prices. Wood Mackenzie estimates Namibian developments could breakeven at around $40-50, depending on scale and location.
Source: Petroleum Economist