Namibia Government Considers Oil Block Auctions to Improve Terms

Namibia may revert to auctioning oil and gas exploration blocks because it will give the government better terms than the existing open licensing system, said Petroleum Commissioner Immanuel Mulunga.

“We can get better terms because it will be an auction,” Mulunga said in an interview in the capital, Windhoek yesterday. “We should do it. We have enough licenses and we need to focus on those ones to carry out the work.”

Namibia, which has issued 46 exploration licenses, adopted an open licensing system after an auction in 1998 failed to attract investors. A decision on whether to adopt a new system has yet to be made, Mulunga said.

Namibia has attracted attention from the world’s biggest oil companies even after at least 18 wells failed to find commercial deposits of crude. Explorers such as BP Plc (BP/) and Chariot Oil & Gas (CHAR) Ltd. have snapped up assets on a bet that the nation’s coastal shelf may mirror that of Brazil across the Atlantic, while Royal Dutch Shell Plc (RDSA) announced in February it was taking over two exploration blocks in the Orange Basin.

“That’s barely scratching the surface considering the size of the area,” said Mulunga, commenting on the exploration wells. “We expect the smaller companies we have licensed to bring in the bigger players.”

A spate of 3D seismic surveys suggests the next two years will be “critical” for the exploration industry, he said.

“There is going to be another bigger player coming into Namibia before year end, but we want companies shooting 3D seismic to work toward drilling,” said Mulunga. “The more exploration wells are drilled, the better the chances for a discovery.”

Namibia’s neighbor Angola is Africa’s biggest oil producer after Nigeria.

To contact the reporter on this story: Felix Njini in Windhoek at fnjini@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Dylan Griffiths, Andres R. Martinez

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