Namibia eyes 2024 final investment decision on “massive” deepwater oil discovery
(Bloomberg) – Namibia will invest a big chunk of any revenue it gets from a potentially massive oil discovery into a sovereign wealth fund, and expects to learn if the find is commercially viable later this year.
“We understand that the quantities are large, but we still have to test the commercial viability of this oil,” Finance Minister Ipumbu Shiimi told Bloomberg in an interview Tuesday in Washington. “We expect them to reach a final investment decision probably by the end of this year.”
An estimated 11 Bbbl of crude oil was found in the water off the southwest African nation’s shores in 2022 by TotalEnergies SE and Shell Plc.
Some have touted it as potentially the world’s biggest ever deepwater find. If even a fraction of that amount is profitable to exploit, it would quickly swamp the $13 billion Namibian economy.
Shiimi said Shell was probably six months behind Total in terms of completing its feasibility assessment and once a decision to go forward had been taken, it would probably take around five years before the oil started to flow.
Oil could be a game-changer for the sparsely-populated nation of less than 3 million people, where many live in poverty.
“We don’t want to count the chicks before the eggs are hatched, but if the discovery is substantial it is definitely going to change the revenue base of Namibia,” he said.
To ensure the windfall will be available for future generations, Namibia has established a sovereign wealth fund to receive a significant part of the revenue if it materializes.
Sovereign wealth fund. Draft legislation is being drawn up to govern how much oil revenue will go into the fund, how much can be withdrawn and how it will be invested, Shiimi said. The plan is to present it to lawmakers by the end of this year.
“Because revenue is going to be significant, we have to find a way of collecting this revenue and also deploying this revenue in such a way that it’s going to be available for a future generation,” he said.
Namibia’s central bank will administer the fund initially but if it gets big enough, it could be set up as a stand-alone entity.
Joining OPEC+ will be considered if the oil starts to flow but no formal discussions would take place until the commercial viability of the discovery is clear, Shiimi said. “It’s something we’re looking at but it’s something we’ve not taken a firm decision on.”
