NAMIBIA: BUSINESS IMPLICATIONS FROM MAJOR OIL & GAS FINDS

There has been much media coverage of the relatively recent major oil and gas finds in Namibia. Let’s set the scene before discussing the resultant business implications.

First, there were the announcements by Shell and TotalEnergies of the offshore discoveries in the Orange Basin of the Graf and Venus deposits respectively and now there is the declaration that Shell and Qatar Energy have made a third major offshore, deep water find also in the Orange Basin. Analysts estimate that the country could have 11 billion barrels in oil reserves and that the huge revenues from these discoveries could double its GDP by 2040.

Attention should be given to the fact that there are a number of exploratory drillings taking place around and on the edges of these major finds. In February 2023, TotalEnergies and its various partners confirmed that they are embarking on a major multi-well appraisal and exploration programme. Another example is Impact Oil & Gas which recently announced its own multi-well drilling programme. 

These drilling programmes are expensive (particularly as they are deep water) and require a long and technically sophisticated supply chain from specialised marine services to piping to onshore supply yards. One major supplier mentioned to us that the programme he was involved in costs over one million US Dollars per day!

Exploration programmes are in their own right, large generators of revenue for the Namibian government. And the Namibian authorities very understandably wish to ensure maximum local benefit from this new windfall. However, the oil and gas sectors are highly technical and much of the supply requirements will not be locally available. Oil company supply and employment matrixes I have seen predict needs from cleaners, drivers and security guards up to highly skilled marine technologists. So the question is ‘How will Namibia find the balance between local content and the import of foreign-supplied sophisticated products and skills?’ New legislation pertaining to oil and gas is being discussed in parliament.

Whatever degree of localisation is finally achieved, there will be a strong need by the major investors and operators as well as the smaller private role players for recruitment and deployment of appropriately skilled and experienced expats.