Mulunga: oil exploration highly uncertain

Former petroleum commissioner Imms Mulunga says the chances of the companies prospecting for oil in Namibia finding commercially viable oil is as low as 25 to 35%.

Reacting to this week’s announcement from Chevron that they failed to find commercially viable hydrocarbons in one of the wells they drilled along the Orange Basin, Mulunga – who also served as managing director for the National Petroleum Corporation of Namibia (Namcor) – said oil exploration is a very risky undertaking.

Mulunga hinted that the failure of some companies to find viability in the drilled wells was expected.

The American oil producer said the Kapana 1X well in the PEL90 block provided valuable information about the basin, and the company anticipated it would explore further in Namibia.

RECENT SETBACKS

Oil companies have flocked to the southern African country, with recent offshore finds ranking among the largest this century, though exploration has been dealt some blows.

Shell said last week that it will write down about US$400 million (about N$7.55 billion) over an oil discovery offshore of Namibia that it deemed commercially unviable.

Namibia’s national oil company said in April it signed a development deal with Chevron to have the company take an 80% operating working interest in an offshore block in the Walvis Basin.

“It should not be surprising that many of the oil wells that are drilled turn up dry. We actually had many dry wells before we found any oil,” Mulunga said.

He said the Chevron revelations are not good for the country’s oil sector, coming as they do shortly after similar news from Shell that it had also not found oil and gas of commercial quantities.

He said this might have the effect of shifting the country from being the darling of oil investors worldwide if there is a perception that the sector is not viable.

“We, however, have success stories from companies like Galp, who had found something substantial,” he said, warning that the government must continue sending the right signals to investors that it has created an enabling environment.

“The government must not allow the capture of the sector for the benefit of few individuals and appoint the right people in the right positions,” he said.

Namcor has a 10% stake in all oil claims in the sector.

Acting Namcor managing director Ebson Uanguta could not be reached for comment.

HOPE FLOATS

Meanwhile, Windhoek-based energy sector lawyer Shakwa Nyambe says the failure by Chevron to find reserves of commercial value is not the end of the world for the oil company.

However, Nyambe said Chevron’s petroleum block is large and they have only drilled one block so far.

“The block is big and it does not mean it’s all over for them. They can go back to their geological data, drill somewhere and strike oil,” he said.

In light of their recently announced intention to write down the book value of their Namibian assets, Shell’s view that the discoveries on its block were not currently commercial has somewhat tarnished the basin’s glittering exploration reputation.

Efforts to get comment from minister of mines Tom Alweendo and petroleum commissioner Maggy Shino were unsuccessful yesterday.