While the focus in Namibia might be on delays to its oil development, the country is aiming to diversify its energy mix by developing gas, renewables and hydrogen—goals that are likely to be reached at varying speeds and with variable results.

The country’s initial plan for oil development is likely to start with TotalEnergies’ 2022 Venus discovery in the offshore Orange Basin, where the company expects to reach FID in 2026—at least a year later than previously envisaged.

“Kudu gas could be part of the solution” Thom, Wood Mackenzie

Portugal’s Galp is looking for partners to develop Mopane, which it said has a hydrocarbon in-place estimate of 10b boe. Developing Venus and Mopane could  yield 250,000–400,000b/d in the mid-2030s, according to the IEA. TotalEnergies aims to produce about 150,000b/d from Venus.

Namibia, though, does not want to stop at oil development, given some disappointing exploration drilling results from Chevron and Shell earlier this year, and intends to proceed with long-delayed plans to develop the offshore Kudu gas field with the help of Oslo-listed BW Energy. Simultaneously, Namibia wants to boost its renewable power capacity and develop a green hydrogen industry for domestic and export markets in Europe and Africa.

“Renewable energy, hydrogen, nuclear, gas [and] oil—all the resources that are available to us and our neighbours—will be considered to develop a futureproof and strategic master plan for Namibia,” said James Mnyupe, head of the state-run Namibia Green Hydrogen Programme and a former economic advisor to the president.

Oil oversight

Namibia’s new president, Netumbo Nandi-Ndaitwah, made the development of the country’s energy sector a central prong of her economic policies when she came to power in March by moving oversight of the oil and gas portfolio to her presidency three days after inauguration.

“The new emerging industries of oil and gas need to be managed in the manner that maximise benefits for all Namibians,” Nandi-Ndaitwah said in a statement.

Besides developing oil and gas resources, Nandi-Ndaitwah has talked about setting up a refinery, potentially in partnership with Botswana, that can serve neighbouring countries and even proposed building a nuclear power plant with the help of international companies given Namibia’s status as the world’s third-largest uranium supplier.

“President Nandi-Ndaitwah has moved the oil and gas ministry inside the presidency to have a closer eye on it, which may provide more oversight, though could also reduce transparency,” said Shawn Duthie, director for political risk in southern Africa at consultancy Control Risks. “That said, I think a lot of the priorities will remain the same from the previous administration.”

Developing Kudu will help boost power generation capacity, with nearly half of Namibia’s 3m people not having access to electricity. Namibia imports 70–80% of its power from neighbouring countries such as Zambia and South Africa, and the country has the highest power prices in southern Africa, according to the IEA. However, it is planning to generate 80% of its electricity domestically by 2028.

“Namibia is pursuing further penetration of electricity in its domestic market and to be self-sufficient in energy supply,” said Ian Thom, research director for upstream at consultancy Wood Mackenzie. “Kudu gas could be part of the solution.”

Developing Kudu alongside Venus and other offshore oilfields, some of which are in water depths of 3,000 metres, may help address the problem of high gas-to-oil ratio in the wells drilling in the Orange Basin, which will hike up production costs and complicate development.

“Trying to develop gas (with oil) from the beginning would mean a much more expensive and riskier proposition,” said Thom. “Once oil revenues are flowing and stable operations are established, the gas commercialisation can be evaluated as a separate follow-on activity.”

Such hurdles are some of the reasons behind TotalEnergies’ delay in making FID. The oil major is reluctant to move ahead with a project unless production costs are below $20/bl.

“Both QatarEnergy and TotalEnergies have the experience to be able to monetise the gas from the Namibian finds… but the question will be whether the gas volume is enough to justify the very large costs to build the necessary infrastructure,” Duthie, Control Risks

“I expressed to the government that we have some thresholds in terms of, I would say, [internal rate of return] targets and that I need to protect the project in case the price of oil would go down,” Pouyanne said on an investor call in April.

He was describing his conversation with Namibian officials after making his first visit to the country earlier in April.

“We need to have a long licence to produce the 750m bl of oil,” he added. “We need that as well because it faces some challenges. It is a 3,000-metre water depth project, which means capex.”

Despite finding potentially good oil resources, TotalEnergies is also facing low permeability and high development costs due to the expense of building pipelines at such depths, he added.

“I am not driven by the volume,” said Pouyanne. He added that developing the project was in the common interest of TotalEnergies and Namibia, but that it would proceed only if it met the company’s return targets. “There is possibility to find a common space with the government, but we need to be two persons to tango.”

Gas issue

Prospects for first oil suffered setbacks when Shell revealed in January that it had made a $400m write-off for discovered resources that were deemed not commercially viable mostly for its oil finds in Namibia. Chevron also announced in January disappointing results in its first well in the Orange Basin.

Namibia needs to solve the gas issue with oil development for several reasons: it cannot keep re-injecting gas into fields, and the country’s laws ban flaring.

That is why Namibia is looking at capturing gas from oilfields and potentially combining it with Kudu production as feedstock for a gas power plant and selling electricity—or even gas itself—to neighbouring countries such as South Africa, said Mnyupe.

“That is why we are developing an energy masterplan to say with these targets we have: how much of Kudu could we offtake?” said Mnyupe. “Because Namibia is small, we cannot support Kudu on our own.”

Among TotalEnergies’ partners in Venus is state-owned QatarEnergy. The two companies, which are partners in the Qatar’s massive LNG expansion project, could eventually look to produce LNG in Namibia, if economically feasible.

“Both QatarEnergy and TotalEnergies have the experience to be able to monetise the gas from the Namibian finds, and there is likely the market for the gas, but the question will be whether the gas volume is enough to justify the very large costs to build the necessary infrastructure,” said Duthie. “Considering the offshore blocks are roughly 300km from shore, it would be quite a gamble for both companies to go ahead with this, and this decision is also likely delaying the project from reaching FID.”

Renewables and hydrogen

As Namibia tries to solve the gas and oil development dilemma, it is moving ahead with diversifying its energy mix by boosting renewables production. It wants to produce 70% of its power from renewable energy—primarily wind, solar, biomass and hydropower—by 2030.

“Its landscape is perfect for [solar], so we expect this to continue growing, though hydro will also remain as a baseload for the future,” said Duthie.

At the end of 2022, Namibia had 750MW of installed generation capacity with 46% coming from hydropower, followed by solar with 23% and coal with 16%, the IEA said in a November report. The remaining power sources are heavy fuel oil plants, rooftop solar PV and wind, the IEA said.

Although Namibia’s wind capacity was 5MW at the end of 2022, the country has high potential for bigger projects because it is one of the world’s windiest places, with vast land and low population density, the IEA added.

Namibia wants to add another 70MW of wind capacity in the next five years and other power projects as part of plans to develop industrial clusters, said Mnyupe.

“We are looking to become a regional industrialised nation, not just an exporter of oil,” he said. “Namibia is not a linear story.”

Namibia has also set its eyes on developing a green hydrogen industry catering to customers in Europe and Africa.

It has already started using green hydrogen in an iron ore kiln to produce green iron in project backed by Berlin in cooperation with German steel producer Benteler and energy provider RWE.

Namibia has already secured a 200,000t/yr offtake agreement for direct reduced iron with Benteler and now wants to raise new financing to add four more kilns, said Mnyupe.

The country is also talking to Japanese investors and companies, including Mizuho Financial Group—the country’s third-largest lender—and Toyota for potential offtake agreements and equity stakes as well, he added.

“We are going to be bunkering low-carbon ammonia hopefully by 2028–29,” said Mnyupe. "We can have green steel if we work well with our partners. The green steel could be exported into Africa, Germany and Japan.”

Hyphen Hydrogen Energy is expected to be Namibia’s biggest green hydrogen venture, with plans to produce 1mt/yr of green ammonia by the end of 2028 and 2mt/yr by the end of 2030, targeting exports markets in Europe, Japan and South Korea. The Namibian government and German energy company Enertrag are among partners in the $10b project. The company is expected to reach FID in 2026.

Cleanergy Solutions Namibia, a joint venture between the country’s Ohlthaver & List and Belgian oil tanker group CMB Tech, started in 2024 a pilot project for a hydrogen production and refuelling station. Other announced projects have yet to take off.

“The focus on green hydrogen has decreased with the oil and gas discoveries, and a lot of the projects have stalled,” said Duthie. “While there is opportunity, the focus has shifted to what can be done with LNG in Namibia, and this will continue for the near future.”

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Author: Dania Saadi