Connect with us

Crude Oil

Shell’s Sizeable Oil Discovery in Namibia Means Huge Opportunity For Economic Growth

Published

on

shell

The National Petroleum Corporation of Namibia (NAMCOR) – alongside partners Shell Namibia Upstream B.V. and Qatar Energy – have announced the discovery of sizeable quantities of light oil in both primary and secondary targets at the Graff-1 well offshore Namibia, ushering in a new era of hydrocarbon exploration and production for the country. This discovery, coupled with the country’s favorable regulatory environment, is set to create an influx in new investment, while further positioning Namibia as a highly competitive and increasingly lucrative upstream destination.

Representing one of Africa’s final frontiers for oil and gas exploration, potentially rich basins across Namibia have spurred the appetite of regional and international oil companies (IOC) alike, leading to a succession of exploration campaigns in recent years. The most notable include an ongoing drilling campaign by Reconnaissance Energy Africa – which has already indicated that Namibia’s 6.3 million-acre Kavango Basin may hold billions of barrels of oil – as well as Shell’s 2022 discovery. Located in the Orange Basin offshore Namibia, 270km from the town of Oranjemund, drilling operations on the Graff-1 well commenced in December 2021 and were completed in February 2022. Owned by Shell (45%) – as the operator – Qatar Petroleum (45%) and NAMCOR (10%), the discovery will play a significant part in the country’s overall energy and economic transformation.

So what will this discovery mean for Namibia and its people? Firstly, regarding the country’s energy future, the discovery is set to usher in a wave of new investment across the entire energy value chain. With Namibia’s energy sector considerably undeveloped, capital injections in key industries such as infrastructure, power generation and distribution and production will soon follow as investors turn an eye to this highly potential market. Secondly, once developed, this discovery will significantly improve energy security in a nation that relies heavily on petroleum imports and intermittent hydropower. The development of a consistent domestic energy supply will prove critical for the country’s economy, while reducing imports from neighboring countries.

What’s more, the discovery will serve as a catalyst for enhanced economic growth in the southern African nation. Notably, the creation of a domestic petroleum market will create thousands of jobs for the local population across every industry in the value chain while motivating the creation and establishment of various domestic companies. In developing a petroleum market, the country will require numerous service companies, thus, creating newfound opportunities for the population. Additionally, the discovery will initiate growth across various sub-sectors of the economy, including but not limited to transportation, education – through technical training and skills transfer – infrastructure and industrialization. This will be critical for the country as it pursues an economic recovery in a post-COVID-19 landscape.

“Credit is due to Shell and partners for sticking with their drilling campaign in an environment where frontier exploration drilling fell to the lowest level ever recorded in Africa. Many majors have not had a long term approach rather they have instead focused on quicker return. Shell has shown resilience and commitment to Namibia which is a good thing,” states NJ Ayuk, Executive Chairman of the African Energy Chamber.

“The resource is large, the unit cost for producing in Namibia should not be too high, and I am confident Shell has the skill set and technology to operate this field in a low-carbon environment,” Continues Ayuk.

“H.E. Tom Alweendo, the Minister of Mines and Energy, Petroleum Commission, Namcor and other Namibian authorities have been very pragmatic in their approach with energy companies, and it is commendable. They have learned a lot from the mistakes of others, and we are confident they will get it right, especially on fast tracking field development decisions, pragmatic local content and ensuring that the resources improve the living conditions of their citizens. They’re up against a lot, but they have a lot of partners who are going to support them. I believe Namibia and many African countries will see more drilling of high-impact oil and gas prospects which is very good as these resources are needed to make energy poverty history,” concludes Ayuk.

Meanwhile, as Namibia pursues exploration and production of the discovery, it is critical that the country develops an oil and gas bill to ensure effective regulation, certainty, and overall beneficiation of the find. The establishment and implementation of market-driven policies through an oil and gas bill will have a number of benefits, both for explorers and producers and the country itself. Firstly, the bill will improve certainty and transparency across the industry, providing IOCs and domestic companies clarity with regards to industry procedures and policies. This will ensure productivity while reducing time taken to get projects off the ground. Secondly, the bill will enable the regulation of the industry, providing clarity on tax, risk, ownership and safety, as well as environmental and local content policies. This way, the government can ensure the country fully maximizes the benefits brought about by the find.

In developing a progressive oil and gas Bill, taking into consideration the environmental impacts associated with these types of developments, Namibia will need to put in place strict environmental policies to ensure impacts are minimal. With global pressures mounting to transition to clean sources of fuel, many international stakeholders are calling for the end of fossil fuel utilization. Therefore, it is critical, now more than ever, to ensure oil and gas exploration and production is achieved with minimal emissions.

Namibia has already made a strong play for investment at continental energy conferences such as African Energy Week (AEW) 2021. Now, backed by this exciting discovery, the country is well positioned to drive new investment and development across its energy landscape.

At the second edition of AEW in Cape Town on the 18th-21st of October 2022, Namibia will take a leading role in hydrocarbon dialogue, promoting the country’s rich resources, upstream potential, and competitive edge. AEW 2022 remains focused on alleviating energy poverty, recognizing the role oil and gas will play in achieving this objective. As international hydrocarbon explorers and producers make their way towards lucrative frontier markets such as Namibia, AEW 2022 will be the platform to sign deals, form partnerships, and network and engage with a number of global and African stakeholders.

Continue Reading
Comments

Crude Oil

Global Oil Prices Appreciate to $77.85 After Saudi Announces Plan to Cut Production

Global oil prices appreciated on Monday morning following Saudi Arabia’s announcement that it will cut crude oil production by 1 million barrels per day (bpd) from the month of July to curb global economic headwinds weighing on the market.

Published

on

Crude Oil - Investors King

Global oil prices appreciated on Monday morning following Saudi Arabia’s announcement that it will cut crude oil production by 1 million barrels per day (bpd) from the month of July to curb global economic headwinds weighing on the market.

Brent crude oil, against which Nigerian oil is priced, rose by $1.72, or 2.3%, to $77.85 a barrel by 10:48 am Nigerian time while the U.S. West Texas Intermediate crude also climbed by $1.72, or 2.4%, to $73.46.

Both crude oils gained more than 2% on Friday after the Saudi energy ministry announced that the top exporter would reduce output from 10 million bpd in July to 9 million bpd in May 2024. The biggest of such reduction in years.

The voluntary cut is on top of a broader deal by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia to limit supply into 2024 as the OPEC+ producer group seeks to boost flagging oil prices.

OPEC+ pumps about 40% of the world’s crude and has cut its output target by a total of 3.66 million bpd, amounting to 3.6% of global demand.

“Saudi remains keener than most other members in terms of ensuring oil prices above $80 per barrel, which is essential for balancing its own fiscal budget for the year,” said Suvro Sarkar, leader of the energy sector team at DBS Bank.

“Saudi will probably continue doing whatever it takes to keep oil prices elevated … and take calculated pre-emptive steps to ensure the macro concerns potentially affecting demand are negated.”

Consultancy Rystad Energy said the additional Saudi cut is likely to deepen the market deficit to more than 3 million bpd in July, which could push prices higher in the coming weeks.

Goldman Sachs analysts said the meeting was “moderately bullish” for oil markets and could boost December 2023 Brent prices by between $1 and $6 a barrel depending on how long Saudi Arabia maintains output at 9 million bpd over the next six months.

“The immediate market impact of this Saudi cut is likely lower, as drawing inventories takes time, and the market likely already put some meaningful probability on a cut today,” the bank’s analysts added.

Many of the OPEC+ reductions will have little real impact, however, as the lower targets for Russia, Nigeria and Angola bring them into line with their actual production levels.

In contrast, the United Arab Emirates (UAE) was allowed to raise output targets by 200,000 bpd to 3.22 million bpd to reflect its larger production capacity.

Continue Reading

Crude Oil

Global Oil Prices Surge as US Lawmakers Suspend Debt Ceiling

Global oil prices appreciated on Friday after the United States lawmakers voted to have the country’s debt ceiling suspended for the next two years.

Published

on

crude-oil-production

Global oil prices appreciated on Friday after the United States lawmakers voted to have the country’s debt ceiling suspended for the next two years. On the final vote, 149 Republicans and 165 Democrats backed the measure, while 71 Republicans and 46 Democrats opposed it.

Brent crude oil, against which Nigerian oil is priced, rose by 77 cents, or 1% to $75.05 a barrel by 9 am while U.S. West Texas Intermediate crude (WTI) was up 69 cents, or 1%, at $70.79.

Markets were reassured by a bipartisan deal to suspend the limit on the U.S. government’s $31.4 billion debt ceiling, which staved off a sovereign default that would have rocked global financial markets.

Earlier signals of a potential pause in rate hikes by the Federal Reserve also provided support to oil prices, not least by weighing on the U.S. dollar , making oil cheaper for holders of other currencies.

Investor attention is now fixed on the June 4 meeting of the Organization of the Petroleum Exporting Countries and allies including Russia, collectively called OPEC+.

OPEC+ in April announced a surprise cut of 1.16 million barrels per day in April, but the gains from that move have since been retraced and prices are below pre-cut levels.

But signals on any fresh cut have been varied, with Reuters reporting and bank analysts indicating that further output cuts are unlikely.

On the demand side, the U.S. Institute for Supply Management (ISM) said its manufacturing PMI fell to 46.9 last month, the seventh-straight month that the PMI stayed below 50, indicating a contraction in activity.

Manufacturing data out of China painted a mixed picture. Thursday’s better-than-expected Caixin/S&P Global China manufacturing PMI contrasted with the previous day’s official government data that reported factory activity in May had contracted to the lowest level in five months.

Continue Reading

Crude Oil

Weak Chinese Data Weighs on Oil Prices Today

Oil prices declined by 2% on Wednesday as weak Chinese data and a stronger United States dollar dragged on commodity prices.

Published

on

Crude Oil - Investors King

Oil prices declined by 2% on Wednesday as weak Chinese data and a stronger United States dollar dragged on commodity prices.

Brent crude oil, against which Nigerian oil is priced, dipped by $1.75, or 2.37%, to $71.96 a barrel at 3:46 pm while U.S. West Texas Intermediate crude (WTI) shed $1.90, or 2.74%, to $67.56.

The decline in prices was caused by weak Chinese manufacturing activity. The data released by the Chinese government showed that activity in the sector contracted faster than expected in May with the official manufacturing purchasing managers’ index declining from 49.2 posted in April to 48.8 in May, below the 49.4 predicted by economists.

Also, the strong U.S. dollar is another factor impacting the purchase of crude oil as buyers holding foreign currencies found it too expensive.

The U.S. dollar index, which measures the greenback against six major peers, saw support from cooling European inflation and progress on the U.S. debt ceiling standoff, which will advance to the House of Representatives for debate on Wednesday.

Market players are preparing for the upcoming June 4 meeting of OPEC+ – the Organization of the Petroleum Exporting Countries and allies including Russia.

Mixed signals by major OPEC+ producers on whether or not the group will decide to further cut oil production have sparked recent volatility in oil prices.

Despite the latest pullback in prices, HSBC and analysts do not expect OPEC+ to announce further cuts in the upcoming meeting.

HSBC said on Wednesday that stronger oil demand from China and the West from the summer onwards will bring about a supply deficit in the second half of the year.

Continue Reading
Advertisement
Advertisement




Advertisement
Advertisement
Advertisement

Trending