The plunge in crude prices to below $50 a barrel has curbed oil and gas explorers’ plans for drilling in Namibia next year, the country’s petroleum commissioner said.
“We have at least three majors that have indicated to us that they will be drilling in 2016,” Immanuel Mulunga said. “I am more confident of three instead of five or six” announced last year, he said. While Namibia was interesting to explorers “way before” oil rose to $100 a barrel, “the current trend is worrying,” Mulunga said.
Explorers are cutting back or delaying projects and drilling plans after crude plunged more than 50% since June. Basins off Namibia have attracted attention from the world’s biggest oil explorers on a bet that the southwest African nation’s coastal shelf may mirror that of Brazil across the Atlantic and neighboring Angola, the continent’s second-biggest oil producer.
Namibia is still considered an oil-exploration frontier, and its only known discovery is the Kudu gas field, which has yet to be exploited. It has issued more than 46 exploration licenses.
“It’s still early days for us but if it goes on like this into late this year or next year, it might cause us some worries,” Mulunga said. “We are hoping that there is going to be an upward shift in the prices.”
Three wells are expected to be sunk in the Orange River, Luderitz and Walvis basins next year, Mulunga said, declining to name the operators. Royal Dutch Shell Plc has two exploration blocks in the Orange River Basin and Murphy Oil Corp. has a pair in the Luderitz Basin off the southern coast.
Tullow Oil Plc, which owns a block in the Orange River Basin, said in November it plans to drill a well in 2016, while Murphy also raised the prospects of work at the Luderitz prospect.
Explorers searching for deposits of crude off the southwest African coast had all along been undeterred by 21 dry wells drilled up to 2014, but the appetite may fizzle out as the oil-price plunge forces budget cuts.
“We hope this phase is temporary and won’t go on for too long,” Mulunga said.
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