Namibia, which has attracted huge interest in its offshore oil and gas potential, intends to close its open licensing system by year-end and revert back to bid rounds in future, a senior government official said on Thursday.
Chariot Oil and Gas has secured BP and Brazilian state oil company Petrobras as exploration partners after finding a potentially massive oil field off the country’s coast.
Namibia’s geology is considered similar to that in the Santos Basin off Brazil’s coast, where some of the largest oil discoveries of recent years have been made.
“Actually, because all the interesting blocks have been taken, it is the government’s intention to close the open licensing system that we currently have, which was adopted in 1999, because if we continue with that it will not be in the interest of government,” Immanuel Mulunga, Namibia’s petroleum commissioner, said on the sidelines of an African oil and gas conference.
Mulunga told Reuters the government would in future probably revert to holding bidding rounds every four or five years.
“I think by the end of this year we will try and shut it down and we will just try and finalise negotiations with companies we are busy with now,” he said, adding that onshore exploration would continue with an open licensing system, mainly because there was insufficient data.
Mulunga said Namibia has just approved Brazilian state oil company Petrobras, which entered Namibia last year, as the operator of Block 2714A, where it holds 50 percent, BP 25 percent and Chariot the remainder.
He said Namibia, better known for its uranium resources, had also signed a new production agreement with Tullow Oil for the company to help in developing the Kudu gas-to-power project.
“I am happy to announce that they have signed a new production agreement and a new 25-year licence will be issued to them for the development of the Kudu gas project”.
Ongoing discussions are expected to be finalised soon and Namibia expects a final investment decision to be taken before 2012.
To date there have been 16 exploration and appraisal wells drilled offshore of Namibia, half of them at Kudu gas field, said Mulunga. The field has proven gas reserves of 1.3 trillion cubic feet (tcf) of gas with an upside of 9 tcf, surveys suggest.
Gas from Kudu field, first discovered by Chevron in 1974 and located about 130 km offshore, has been reserved to supply a 800MW power plant to be built at an estimated cost of $1 billion.
Tullow Oil holds a 31 percent stake and is the operator of the field, with Gazprom and state-owned petroleum company Namcor together holding a 54 percent share in the upstream part of the project. Japan’s Itochu Corp holds the remaining 15 percent.
