Oil & Gas

This week, Total Energies and Qatar Energy announced plans to expand their exploration efforts in the Orange Basin offshore Namibia. Additionally, a subsidiary of Chevron entered a deal to acquire a 60% stake and assume operatorship of an offshore exploration block in Uruguay, Brazil's neighbor to the south.

The oil industry has identified offshore Namibia as a promising exploration hotspot, with a high success rate in drilling and appraisal activities along Africa's southwestern coast. This success has motivated major international oil firms to increase their acreage in the area and explore other frontiers.

Following years of limited interest in high-impact frontier exploration due to budget constraints and demand fluctuations, major oil companies and their smaller partners are now increasing their exploration activities, hoping to replicate the success seen in Guyana, where significant oil reserves have been discovered.

In Namibia, the success rate in discoveries has been remarkable, with 15 discoveries of commercial volumes of oil or gas confirmed out of 17 exploration wells drilled since February 2022. While the success rate may not remain as high in the future as more wells are drilled and appraised, the excitement surrounding Namibia's potential has prompted major oil companies to consider expanding their exploration in other areas.

Namibia is a key exploration target for supermajors Shell and Total Energies, as well as Portugal-based Galp. Both Shell and Total Energies have made significant discoveries offshore Namibia, leading to an increase in exploration activities in the region.

Despite the uncertain development designs, timing, and production levels, Wood Mackenzie estimates that Namibia's oil economics could be robust, with net present value (NPV) remaining positive even at oil prices as low as $40 per barrel. This success, along with European Big Oil's focus on profitable projects, is driving more exploration activity in the region.

In addition to Namibia, exploration efforts are also expanding to other offshore areas.Total Energies and Qatar Energy are acquiring a nearby license in the basin in South African waters to further their exploration efforts in the Orange Basin offshore Namibia.

Overall, the success in Namibia and the renewed focus of European Big Oil on profitable projects are encouraging more exploration activity in the region, with companies like BP, Exxon, Chevron, Shell, Equinor, and China's CNOOC exploring new opportunities.