Monday, July 9, 2012

Namibia: Windhoek announces a major oil find

Namibia has discovered a major offshore oilfield in its southern territorial water – possibly giving it access to 11-billion barrels in oil reserves.

Production could begin in four years, Mines and Energy Minister Isak Katali announced to Namibia’s parliament on Wednesday (7 July 2011).

The find could put Namibia on par with neighbouring Angola, whose reserves are estimated at around 13-billion barrels and whose production rivals Africa’s top producer, Nigeria. Most of the oil is thought to be concentrated just off the country’s south coast. 

If the estimated 11-billion barrels is confirmed, the development could change the geopolitics of the Southern African region forever, for better or worse. At current prices, 11-billion barrels translates to US$1, 2-trillion in oil revenue, equal to the annual GDP of the entire African continent. That amount of energy could also power Southern African economies for decades, helping to pay for investments in economic infrastructure, education and skills, health, and other pressing developmental areas. More immediately, fuel prices could be reduced across the region, particularly if the oil is refined locally.

However, oil has proved to be a mixed blessing for most African countries. It has tended to lead to a rise in state corruption, and to the growth of often armed cessationist movements in oil-rich regions. Angola and Nigeria provide examples of both developments. 

Katali said that Enigma Oil & Gas, owned by London-listed Chariot Oil & Gas, has identified 11 prospects along the southern coast, adding that first production could begin as early as 2015. Enigma holds 50% equity in the offshore Southern Block, together with Brazil's Petrobras.

According to Katali, another Brazilian company, HRT Oil & Gas Ltd, has raised US$1,3-billion on the Brazilian stock market, with US$300-million earmarked for oil and gas exploration in Namibia. He said that HRT has certified about 5.2-billion barrels of potential reserves.

In his statement to parliament, Katali added that HRT would drill three to four wells in that area as early as next year.

Another find off Namibia’s central coast called Delta Prospect contained recoverable resources of up to 2-billion barrels of oil, by Arcadia Expro (AEN) Namibia and British firm Tower Resources, he said.
Namibia has long been seen as a potential new source of oil, hampered by a lack of exploration to determine the extent of its reserves. Its offshore geology is similar to Brazil, which is seeing a boom in oil.

Source: Southern Africa Report