Namibia tempers oil expectations after recent drilling campaigns
Namibia is taking a more cautious view on its long-term oil prospects after the latest exploration wells failed to add to a string of discoveries that started about three years ago.
Chevron Corp and TotalEnergies are among explorers that reported drilling duds in recent months, while Galp Energia and Rhino Resources this week each said they’re studying the results of their own campaigns. Last month, Shell said it wrote off about $400-million of non-viable wells.
When TotalEnergies and Shell made offshore discoveries there in 2022, the sparsely populated African country aspired to develop its resources quickly before a global energy transition lowers demand for crude. But recent results from offshore fields have brought on a more measured view, and central bank Governor Johannes !Gawaxab says expectations should be dialed back.
“I think the hype was too high, right?” !Gawaxab said last week. “So we need to lower expectations and wait until we have got a final investment decision made by one of the oil majors that they’re going to develop the fields.”
Still, TotalEnergies expects to drill additional wells through next year when it plans to make a final investment decision on its Venus project that would produce 150,000 barrels a day, Chief Executive Officer Patrick Pouyanne said earlier this month in an earnings presentation. Other explorers with blocks have outlined more activity.
“The continued commitment of industry players to the Namibian offshore sector is a strong signal that exploration efforts will persist, with the potential for further discoveries in the near future,” Namibia’s state-owned oil company Namcor said in response to questions. “Exploration is an inherently high-risk, high-reward activity.”
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