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The oil industry has discovered its new exploration site off the coast of Namibia. The increased success of drilling and appraisal activities off the southwest coast of Africa is prompting major oil companies to expand their acreage in the region and seek select exploration frontiers.
After years of combined interest in high-impact pioneering exploration due to fiscal austerity following the 2015-2016 crisis and the collapse of Covid demand, major foreign oil corporations and their smaller partners are stepping up exploration again, hoping to locate the next Guyana. , where Exxon and Hess discovered more than 11 billion barrels of oil at the site.
Namibia’s Good Luck Story
Off the coast of Namibia, the pace of discoveries has been phenomenal so far: companies have shown 15 discoveries of advertising volumes of oil or fuel in 17 exploration wells drilled since February 2022, notes the Financial Times.
Of course, the good fortune rate is expected to remain so high as more wells are drilled and evaluated. But the excitement Namibia has generated in the industry may prompt big oil corporations to breathe life into exploration in other regions as well, according to the Financial Times.
Namibia is a key exploration target for big companies Shell and TotalEnergies, as is Portugal’s Galp.
TotalEnergies and Shell have already made primary discoveries off the coast of Namibia, which kicked off the Namibian oil rush in 2022.
TotalEnergies made a significant discovery of related fueled soft oil at the Venus prospect in the Orange Basin in early 2022. Venus in Namibia may simply be a “giant oil and fuel discovery,” the French chief said in a presentation to investors in September 2022.
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In the past two years, Shell has made four oil and fuel discoveries in the Orange Basin, off the coast of Namibia.
Last summer, Zoë Yujnovich, Shell’s head of embedded and upstream gas, told Shell’s Capital Markets Day that the big company would continue its exploration efforts after good luck in the Orange Basin over the past two years.
“What we are most pleased about in Namibia is that so far, of the three exploration wells and one appraisal well we have drilled, we have achieved maximum sensitive quartile well functionality in our operations in Namibia,” Yujnovitch said.
Earlier this year, Galp showed the discovery of a giant plume of soft oil in the field’s sands, after drilling the first exploration well in offshore Block PEL83 in Namibia.
Galp’s partner in the block, Sintana Energy, said in late January that Galp had discovered a second significant column of light oil in reservoirs containing high-quality sands. The block, PEL 83, is located directly north of PEL 39, where Shell’s initial basin discoveries are located at Graff-1, La Rona-1 and Jonker-1. It is also located north and west of PEL 56, where TotalEnergies has announced its gigantic oil discovery on Venus-1.
In the PEL 90 block, the large US company Chevron applied in November for an environmental clearance certificate, which would allow the drilling of a maximum of five exploration wells and five appraisal wells starting in the fourth quarter of 2024.
In January this year, TotalEnergies signed agreements to expand its stakes in two blocks it already operates off the coast of Namibia.
Exploration Expands to Offshore Areas
This week, TotalEnergies and QatarEnergy announced that they are expanding their oil and fuel exploration efforts in the Orange Basin off the coast of Namibia by obtaining a nearby license in the basin in South African waters.
“Following the good fortune of Venus in Namibia, TotalEnergies continues to advance its exploration efforts in the Orange Basin, obtaining this promising exploration permit in South Africa,” said Kevin McLachlan, senior vice president of exploration at TotalEnergies.
Despite still dubious development designs, timing and production levels, Wood Mackenzie believes Namibia’s oil economy could be robust, with a positive net supply price (NPV) even at oil prices as low as $40 per barrel.
“Overall, we see Namibia as an emerging core region for primaries, with an expected NPV for projects that gives them the potential to become crown jewels for a number of primary entrants,” Ian Thom, director of upstream studies at WoodMac, wrote in November.
The success in Namibia and the return of major European oil corporations to their core business of supplying oil and fuel from successful projects is encouraging more exploration activities.
British supergiant BP will explore the Sau Brasil prospect in Brazil’s marginal pre-salt zones. Other big ones — including Exxon, Chevron, Shell, Equinor and China’s CNOOC — have recently abandoned exploration efforts in some of the pre-salt regions off Brazil.
In Uruguay, Brazil’s southern neighbor, a Chevron subsidiary reached an agreement this week to take over 60% of the company and take over the operation of an offshore exploration block. Chevron Uruguay Exploration Limited will obtain a 60% interest in Challenger Energy’s AREA OFF-1 block and operation of the block.
“We strongly believe that the AREA OFF-1 has enormous potential,” stated Eytan Uliel, CEO of Challenger, adding that the company’s strategy for Uruguay’s offshore block was to “introduce a larger commercial player as an operating partner, with a view to moving forward rapidly” through an accelerated three-dimensional seismic crusade followed, we hope, by drilling exploration wells. “
By Tsvetana Paraskova for Oilprice. com
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