Namibia pushes oil companies to drill more


Windhoek – HRT Participacoes em Petroleo SA, the Brazilian oil explorer that failed to find commercially viable deposits in Namibia after drilling three wells, says it might secure partners at some of its 10 Namibian blocks before the end of the year.


“We are hopeful to find partners to provide us with finance to drill. We are looking at farming out at all our blocks and we have opened a data room in Houston,” Martin Thomas Davis, HRT Africa President said in an interview, in Windhoek.

“There have been serious contacts by a number of well-known companies, by the end of the year we would have made significant progress on this,” Davis said, on the side lines of an oil and gas conference organised by Rich Africa Consultancy.

HRT, which has 10 exploration blocks, one of the largest acreage offshore Namibia, made a sub-commercial discovery after drilling to a depth of 5.7 kilometres at Wingat-1, having failed to find crude at two other wells. HRT wants to drill its next prospect, Meerkat-1, but having sunk around US$300 million in three failed wells, the company says it will not go it alone on future drillings.

“It’s a risky business and cash intensive. Our plan is to minimise risk like most oil companies. We are merely following industry standards,” Thomas Davis said.

Basins in offshore Namibia are similar to passive margins basins in South Atlantic, Brazil, Angola, Gabon and Equatorial Guinea, HRT geologist, Selma Usiku said.

HRT’s successful drilling campaign in Namibia, in which at least 19 wells have failed to find commercial deposits of crude, would depend on the company securing multiple partners and going as far as shedding majority stakes in some of its blocks.

“It’s not a condition that we could be a majority shareholder that is the nature of oil exploration, way you minimise risk is having more partners. Bringing more parties means more cash to drill,” Thomas Davis said.

Namibia’s only known discovery is the Kudu gas fields in the Orange River basin, which is going to be exploited to feed into a planned 1 050 megawatt gas-to-power plant operated by Namibia Power Corp.

Despite successive dry wells, Namibia has attracted attention from the world’s biggest oil explorers such as BP Plc, Chariot Oil & Gas, Royal Dutch Shell Plc, which have snapped up assets on a bet that the nation’s coastal shelf may mirror that of Brazil across the Atlantic.

 More Drilling

The Namibian government wants companies licensed to conduct oil and gas exploration to start farming out to raise financing for drilling and is warning that government will not renew licenses for companies which have not shown intentions to start drilling.

“Some companies are struggling to raise finance for exploration let alone drilling, when these licenses expire, they will not be renewed,” Immanuel Mulunga, Namibia’s Petroleum Commissioner said in an interview.

Namibia has issued 46 oil and gas exploration licenses and expects license holders to seek partners to commence drill, failure of which the licenses would be ‘repossessed’.

“If they don’t position to start drilling, we will not renew the licenses, which is more or less repossessing. But we also see this as farm out opportunities,” Mulunga warned.

Namibia expects U.S firm Murphy Oil Corp, Irish based Tullow Oil and London based Chariot Oil & Gas to announce to drill at their respective blocks between 2015 and 2016, Mulunga said.

Increasing interest for acreage offshore Namibia and a government push for an oil discovery “leaves us fewer options than to emphasis on the importance of drilling, as opposed to just holding on to the licenses” Mulunga said.

“The licences are tied to time frames agreed with the Ministry. If they do not perform the blocks will become available to others with the financial capability,” Mulunga said.

The move to repossess idle blocks is amidst government revelations that acreage for offshore oil blocks is almost exhausted.

“There are no more blocks available, we dished them out to prospectors and we expect them to start doing the work for us to see whether there is oil and gas in those waters,” Isak Katali, Mines and Energy Minister, said when he officially opened the conference.

“Although we have not yet succeeded in striking commercial quantities, we are not disheartened, discoveries require patience, careful exploration and an enabling environment, which as government we are providing,” Minister Katali added.

Government also plans to start encouraging oil and gas searchers onshore, particularly in the northern Owambo basin, Mulunga said.

Companies such as Angola’s Exploracao Petrolifera SA and Houston based Hydrocarb Energy Corporation were this year licensed to conduct exploration in the Owambo basin, onshore Namibia, Mulunga said.

“Onshore has not been explored, we suspect there is potential, particularly in the Owambo basin, but it has not been studied thoroughly,” Mulunga said.

September 2014
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