BEE firm joins oil search
This is the first time the government of Namibia has entered such a deal.
South Africa-based pan-African firm Industrial Development Group (IDG) was on Friday awarded onshore blocks 2815 and 2195 straddling the border with South Africa and Namibia.
IDG said it is targeting a 15 000 square kilometre area in the Orange Basin off the country’s Atlantic coast for exploration.
The firm subsequently announced that it was partnering with two Namibian black-owned firms, Cumoxi Investments and Knowledge Resources.
Erkki Nghitima, Namibia’s Minister of Mines and Energy, announced at the handing-over of the licence that this was the first time government has awarded an exploration licence for oil and gas to an all-African black economic empowerment firm.
‘It is the first time we have issued a petroleum and gas exploration licence to an all-African black economic empowerment company, wholly owned by indigenous Africans,” Nghitima said.
Namibia, which is sitting on huge gas reserves in the Kudu gas field, has become a top choice for oil exploration firms.
So far the government has issued 13 exploration licences to international firms, which are engaged in seismic surveys and drilling, raising prospects that Namibia could have crude deposits.
Exploration for oil is regarded in the mining sector as a high risk and capital intensive business and industry experts say drilling costs as much as US$30 million.
“They are entering a tough industry with high barriers to entry. You are active in several other African countries and have sufficient financial and technical capacity at your disposal to explore your block,” Nghitima said.
IDG chairman Mxolisi Mbetse said there are fears in South Africa that the region’s economic powerhouse could run out of gas in 2012, adding that companies were being proactive in looking for other sources of the fossilised mineral, which is used as a source of energy.
“South Africa is likely to run out of gas reserves in 2012 so we must secure resources,” Mbetse said.
Nghitima said the licence to IDG brings to 13 the number of exploration licences, which have been issued to mining firms scouring for oil in the country’s coastline as mining investors turn the spotlight on the south-west African country, which also has huge deposits of uranium and diamonds.
Although no oil has been discovered yet, companies such as BHP Billiton, Hunt Oil, First Africa Oil Corporation and INA Industrija have narrowed prospects in Namibia’s shores.
Oil firm Chevron Texaco struck a rich vein of gas in Namibia in 1973 in what is known as the Kudu gas field and since then, the government has been swarmed with numerous applications for oil exploration licences.
Geologists believe that Namibia, which borders Angola, Sub-Saharan Africa’s second largest oil producer, has an oil shelf which runs southwards into Namibian territory.
In 2004, founding Namibian President Sam Nujoma challenged state-owned petroleum company NAMCOR to take the lead and drill more wells for exploration if the country was to realise the full potential of its natural resources.