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“the largest 3D seismic campaign never ever before carried out in offshore Namibia”

Sometime between the Samba dances at HRT’s launch and this week’s investment forum, someone must have whispered into the Energy Minister’s ear that a seismic anomaly is not equivalent to an oil discovery. But at last, the Minister said on a public platform that no oil has been discovered yet.
Since Reuters (mis)quoted the Minister on the fantastic discovery of 11 billion barrels of oil, I was flooded with enquiries from Brazil, South Africa, Europe, the UK, the USA and even one from India.
If one goes by the Minister’s statement he made in July in parliament, it is clear he did not explicitly say any oil has been discovered. But the ambiguous way he presented his information, certainly lent itself to misinterpretation. This was also rather soon after HRT flew in the Brazilian Samba dancers and I suppose it was important to create and maintain the appearance of a local oil discovery.
HRT’s IPO in October 2010 raised US$1.4 billion in capital of which US$300 million is earmarked for exploration offshore Namibia. HRT wanted to raise US$1.7 billion but could not convince the market of the value of its future operations. A Brazilian analyst later told me investors only saw value in HRT’s Amazon basin concessions, and regarded the Namibian appendix as a bonus if any actual discoveries were to materialise.
The other two explorers, Chariot Oil & Gas, and Tower Resources through its partner Arcadia, through yet another operation, Neptune Exploration, also reported rock morphologies with the potential to house hydro carbon reservoirs.
Both Chariot and Arcadia were not nearly as vocal as HRT. At least they did not host flashy launches of local operations; they did not fly in a troupe of dancers, and they did not register local companies loaded with political fat cats.
But the pervasive ignorance among government politicians was amply demonstrated, and later documented through all the claims and counter claims that originated from the so-called oil discovery. The headline to this column is pirated from the Minister’s statement which gives an indication that although there are many clever words in his statement, he does not know his elbow from his eyebrow, where it concerns oil.
Oil exploration in Namibian waters did not start with the first acreage auction around 1992. It started in 1972 when Soekor started a systematic magnetic survey of the entire southern African coastline from the Kunene river mouth all the way to Kosi Bay on the opposite side of the continent. This is how Kudu was discovered.
Much more exploration has been done since and in the years from 1992 to about 2000, several large international oil firms were involved in prospecting blocks on the northern arch of the Walvis Ridge, the southern rim of the Namibe Basin (more or less on the 18th parallel), and the Nimrod fields north of Kudu. However, after almost a decade, the big companies lost interest and the Ministry battled to find buyers for its prospecting acreage at its much publicised auctions.
Massive amounts of two dimensional seismic data have been accumulated and lately I see the focus has shifted to three dimensional modelling based on the vertical integration of the many 2D cuts.
There is another “small” snag often overlooked. Typical oil exploration and extraction take place in water depths ranging from 150 to 350 metres. 600 metres is regarded as deep and there are not many drill operators that can work at these depths. Brazil’s Petrobraz was the first explorer to drill a well in 1000 metre water depth but in the process, they lost a rig. The basic fact is: It is not easy to operate in water depth of more than 600 metres. There is a host of logistical and technical considerations. Often targeted reservoirs are another 2000 or 3000 metres below the sea floor so one gets an idea of how complicated deep-sea drilling is.
But since I am not prepared to forsake prosperity on the idiocy of fat cats, I need to point out that there probably is oil below our ocean. It is just a matter of time before a well finds a target. But then again, from 1972 to 2011, that well has not been drilled yet.
And as a last teaser: In the early nineties I visited a previous Minister of Finance in his office, some time after the first acreage auction. On his window sill stood a row of small sample bottles with what looked to me like crumbly black soil. “We know there is oil” he said, “but the big petroleum companies will not tell us. They will seal the well with a radioactive beacon, and one day when it suits them, will they come back and open it!”

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