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Offshore exploration opportunities beckon in Southern Africa
17 May 2021
The African upstream sector is under increasing pressure as
investors focus on core locations and lower carbon short cycle
opportunities. Yet there does still appear to be an appetite for
activity in Africa's under-explored basins, particularly from
leading frontier explorers such as Total and Shell who have the
capability to not only explore but also develop discoveries.
Compared to other Sub-Saharan countries South Africa and Namibia
rate highly in terms of investor attractiveness, with progressive
fiscal system, relatively large and prospective license blocks and
in the case of South Africa supply chain competence. The key to the
timely commercialization of discoveries in these basins is likely
to be ensuring a large enough discovery given the limited existing
infrastructure and in the case of gas a viable end market,
domestically or internationally.
Total's Luiperd and Brulpadda discoveries reawakened interest in
offshore southern Africa. The discoveries opened up a new
ultra-deepwater play in the Southern Outeniqua Basin and are likely
to have positive implications not only for the South African energy
sector, which relies heavily on coal and has been subject to years
of crippling power outages, but also for reigniting further
interest offshore southern Africa. The Luiperd discovery alone
proved to be the largest discovery in Africa in 2020 and the second
largest worldwide.
Total - who holds 16% of available offshore acreage across South
Africa and Namibia - have suspended further exploration plans in
the Southern Outeniqua Basin. This decision is more likely
indicative of the company's confidence in resource content and
potential, presenting an opportunity to negotiate terms and
development plans ahead of the government finalising the new
Upstream Petroleum Resources Development Bill. The sooner a route
to market is established and the new legislation is passed the
quicker these new discoveries can be brought to market. Delays to
the passing of the legislation also puts other offshore exploration
opportunities at risk as investors continue to re-prioritize their
global portfolios.
Figure 1: High impact wells and discoveries offshore
Southern Africa
Another southern African basin to watch is the Orange Sub-Basin
of the greater Southwest African Coastal Basin. In southern Namibia
both Total and Shell are planning high impact deepwater wells this
year. Should respective Venus-1 and Graff-1 prove to be successful,
they could open-up multibillion-barrel plays. Azinam's Gazania-1
well will test an oil target up-dip from a proven stratigraphic
play on the South African nearshore shelf. All three wells are oil
directed and independent of each other, as they test different
plays in the basin. All three wells will require substantial
infrastructure to bring the resources to market. Consequently we
have determined a minimum viable field size of 250 MMbbls for Venus
or Graff and 50 MMbbls for Gazania, given its shallower location.
Any gas discoveries in Namibia could possibly reignite the offshore
Kudu gas development, which has struggled to be developed to date,
whilst a gas discovery at Gazania would struggle to be developed
given its isolated location.
For more information regarding commercial and strategic insights
into Africa's basins, please refer to Plays and Basins.
For more information regarding Africa's risk profile, please refer
to PEPS.
For more information regarding well, field & basin summaries,
please refer to EDIN.
For more information regarding asset evaluation, portfolio view,
and production forecasts, please refer to Vantage.
For detailed E&P activity coverage and context by
country/territory, please refer to GEPS.
For more information regarding our power service, please refer to
Global Power and Renewables.
Keryn Tsimitakopoulos is an Associate Director of
Research for upstream energy at IHS Markit.
