By Dhiladhila Magazine · Issue 18

By mid-2024 Namibia had made some of the decade's biggest oil discoveries and produced none of it. The gap between the two is the whole story.

By June 2024, Namibia occupied an unusual position: a country credited with some of the largest oil discoveries of the decade that was, at that moment, producing no oil at all. Four rigs worked its southern waters, global majors competed for acreage, and a coastal economy was gearing up for an industry that did not yet exist. The exploration boom had made the country famous for oil it had not begun to sell.

The temptation is to treat the discoveries as the arrival of wealth. The more accurate reading is that Namibia stands in the long gap between finding oil and earning from it – a gap measured in appraisal wells, investment decisions and years – and how it uses that gap will decide whether the boom becomes a producing industry or an expensive rehearsal.

What has actually been found

The discoveries are genuine and large. Shell opened the Orange Basin with Graff in 2022 and added Jonker in 2023; TotalEnergies’ Venus is regarded as one of the biggest finds in sub-Saharan Africa; and in early 2024 Galp’s Mopane wells led it to put ten billion barrels of oil equivalent in the ground, with a test flowing at the permitted ceiling of fourteen thousand barrels a day.

Together these turned a quiet frontier into the most talked-about new oil province outside the Guyana-Suriname basin. But every one of them is a discovery, not a producing field, and the figures describe oil in the rock rather than oil on a tanker. The basin is proven; it is not yet productive.

Namibia has proved the oil exists; it has not yet proved it can be sold.

The unfinished work of appraisal

Between discovery and production lies appraisal, and that is where 2024 sits. The rigs are largely drilling to establish how much of the oil is recoverable and whether fields two to three hundred kilometres offshore, under more than two kilometres of water, can be produced at a cost the market rewards. It is slow, costly and deliberately inconclusive.

The official language reflects the caution. The petroleum authorities speak of gathering data to size the discoveries before infrastructure can be designed, and first oil is discussed around the end of the decade rather than the near term. The excitement is in the drilling; the money, if it comes, is years behind it.

The boom of 2024 is an appraisal boom; the production boom is a bet on the 2030s.

The onshore country the boom is building

While the sea is appraised, the coast is already changing. The ports authority is committing to expand Walvis Bay and build a dedicated supply base, service companies are establishing themselves on the coast, and the town is being pressed to add housing, schools and clinics for a workforce it is only beginning to attract. The onshore boom is real even though the offshore revenue is not.

This is where the country earns first. Contractor spending on logistics, accommodation and services is flowing now, and whether it is captured by Namibian suppliers or imported with the rigs is being decided in this phase, through local-content rules and the financial plumbing that lets domestic firms invoice and get paid.

The first income from oil is onshore service spend, and the country is capturing it – or missing it – today.

The balance Namibia says it wants

Namibia has been careful to frame the boom as something to be balanced rather than simply seized. The mines and energy authorities argue that oil development is needed for poverty reduction and energy access, while the same government pursues green hydrogen and a national oil company that talks of becoming a broader energy business. The country is trying to hold a fossil windfall and a low-carbon ambition at once.

That balance is not only rhetorical. The same coast, ports and skills serve oil, gas and hydrogen, and the choices made for one shape the others. A boom governed only for the barrels would crowd out the wider ambition; one governed well could use the oil decade to fund what follows it.

The question is not only how much oil Namibia pumps, but what the oil years are used to build.

The value that has to be kept

The deepest question is capture. Fiscal terms – a royalty, a petroleum tax, an additional profit tax and a state stake through NAMCOR – set the government’s share, but a share of production that does not exist is a claim, not a cheque. The data, skills and institutions built during appraisal are what will decide whether Namibia governs its basin or merely hosts it.

A young oil province can end in either place. It can become a producer that keeps a real share of the value and uses it deliberately, or a country where a great deal of oil was found and most of the benefit left with the companies that found it. Mid-2024 is early enough that both futures are still open.

A basin is only wealth if the country can produce it, tax it and keep enough of it.

For an investor, an operator or a policymaker reading Namibia in 2024, the honest summary is that the country has struck oil but not yet struck wealth, and the distance between the two is measured in appraisal, decisions and the institutions built in between. The decision each of them faces is whether to treat the boom as an accomplished fact or as the opening phase it is – the years in which Namibia either builds the capacity to turn discoveries into a producing, well-governed industry, or watches the value of its own basin be decided by others.

Sources: Reuters; After its Orange Basin exploration boom, Namibia aims to strike balance (Gas Outlook); Ministry of Mines and Energy