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Home Oil & Gas

‘Oil-first’ strategy recommended for Namibia ahead of gas development

by editor
May 6, 2025
in Oil & Gas
1.8k 18
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They argue that oil projects are progressing faster than gas developments and should be prioritised to ensure a more strategic and cost-effective rollout of the country’s energy resources.

Paul Eardley-Taylor, Head of Oil & Gas Coverage for Southern Africa at Standard Bank, said the pace of oil discoveries and production readiness is outpacing that of gas, which remains a longer-term opportunity. He recommended that Namibia first focus on oil while laying the foundation for future gas monetisation.

“Namibia is in a really interesting position at the moment because the more wells that get drilled, the oil is becoming nearer, but the gas is going slightly further away,” said Eardley-Taylor. “The challenge is really how does the country lead with the oil first, but always keeps the gas in mind.”

He noted that while Namibia holds significant gas volumes—estimated at 550 million standard cubic feet per day of reinjected gas, on par with Mozambique’s Coral South LNG project—the country lacks immediate production capabilities, aside from the BW Kudu gas-to-power project.

Eardley-Taylor stressed that gas infrastructure development cannot be left solely to the private sector, calling for a government-led approach.

“Shared infrastructure is something that will come in time. Probably what you will have to have is a situation where the state almost frontloads the development,” he said.

“We don’t think the private sector can do it on its own—it really has to be government-driven.”

He proposed that a centralised site in southern Namibia be identified for shared infrastructure, suggesting Elizabeth Bay over Lüderitz due to fewer competing interests.

“Lüderitz is a fishing port. It’s a tourist town. There are obviously historical issues at the site as well,” he said.

Eardley-Taylor also warned that without a coordinated approach, companies that take the lead on gas projects could be burdened with high infrastructure costs.

“You can almost think of it as a first mover disadvantage if you’re the company that leads the gas project but then gets encumbered with the big infrastructure build-out,” he said.

BW Energy’s Deputy General Manager of BW Kudu, Manfriedt Muundjua, agreed that infrastructure costs pose a major challenge, especially for early-stage gas projects.

He said BW’s current gas plan requires a 12-inch pipeline to transport 140 million standard cubic feet—much smaller than the infrastructure needed for broader gas transport.

“To transport the gas, a pipeline between 24 to 36 inches is needed,” he said. “A mechanism must be agreed upon with other operators or the government to cover the investment gap and ensure the infrastructure is available for shared use.”

Meanwhile, Ian Thom, Research Director for Upstream at Wood Mackenzie, noted that Namibia’s gas strategy is still under development and lags behind ongoing efforts to produce oil and implement local content policies.

“If you look at Namibia’s priorities today, you have a big focus on getting first oil, continuing the exploration programme, and also the local content policy. The gas strategy is sort of competing with all of that for time and attention,” said Thom.

He added that the gas master plan is expected to take shape over the next six to nine months and emphasised the need for regulatory clarity and investor confidence.

“One of the most important parts is clarity,” he said. “Operators need to have a line of sight for how they can progress a project, how they can put the building blocks in place, and have visibility on revenues, with risks managed. If there is a vision and a pathway that is clear, I think that is already half the battle.”

 

 

 

 

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