- While Namibia's offshore basins are believed to be oil rich, few explorations have so far been done and the country doesn't yet produce oil. A US company today was given a licence by the Namibian government to explore possible oil reserves in the Lüderitz Basin, creating new hopes for Namibia's energy sector.
The government of Namibia and the Texas-based Hunt Overseas Oil Company today signed a so-called "Reconnaissance License" for the right to carry out petroleum reconnaissance operations in the Lüderitz Basin, offshore southern Namibia. The agreement was effective immediately upon signature.
For Namibian authorities, this is a welcome development. Since 1999, the Windhoek government has offered easy-going routines for international oil companies wanting to explore both onshore and offshore permits for oil and gas resources. So far, interest has been limited, despite the relative positive geological outlooks to find hydrocarbons in Namibia.
Today's agreement with Hunt Oil therefore was signed by the Namibian government's Petroleum Commissioner of the Ministry of Mines and Energy, Immanuel Mulunga, himself. The license covers approximately 48,000 square kilometres of the offshore part of Namibia, west of the town of Lüderitz. The water depths in the license range from 200 to 3000 meters.
The new partner in Namibia's efforts to develop an oil sector is however a minor player. Hunt Oil is a privately held oil firm, led by Texan millionaire Ray Hunt. Operations by the minor company will thus most probably be on a small scale, typically aiming at making a discovery after drilling as few wells as possible, which thus hopefully would attract bigger investors.
Nevertheless, developing Namibia's oil and gas sector has been a slow process where every foreign investment at this stage is welcome. So far, in 2000, the northernmost Namibian area, Block 1711, was awarded to a US company, Vanco Energy. In May 2003, Vanco announced that it was to drill an exploration well on this oil prospect, Kunene at the Angolan border, where large gas resources earlier had been found.
Other offshore oil operations have also concentrated on the Namibian-Angola border, and Angola's state oil company, Sonangol, is heavily involved in these. Eight blocks in the Namibe Basin, which straddles the maritime border between the two countries, are to be jointly explored and developed by Angola and Namibia.
While there are still no significant oil discoveries on or offshore Namibia, developments have been faster regarding natural gas resources. Large gas discoveries have been made offshore southern Namibia, on both sides of the border with South Africa, termed the Kudu fields on the Namibian side.
While Namibian authorities show a big interest in a commercial development of the Kudu gas fields, plans were somewhat foiled in December last year, as the US oil and gas giant ChevronTexaco announced it was relinquishing its interest in Kudu.
Namibia plans to land gas from Kudu in the southernmost town Oranjemund through a pipeline to construct an 800 megawatt power station here. The government, through the state-owned company Namcor, is heavily engaged in these plans. The future power plant would significantly increase Namibia's electricity production, which currently is far below consumption.
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