Galp makes huge investments in Namibia’s oil sector

Portugal’s Galp Energia, the company that reported positive indications of hydrocarbons from an exploration well in Namibia’s Orange Basin, says it has invested more than N$7,2 billion towards upstream projects, including an exploration campaign in Namibia during 2023.

The group’s chief executive, Filipe Silva, said last year, net capital expenditure totalled N$7,8 billion with investments mostly directed towards upstream projects under development in the Brazilian pre-salt and the exploration campaign in Namibia.

Galp consists of more than 100 companies engaged in every aspect of the oil and natural gas supply, hydrocarbon exploration and production, refining, trading logistics and retailing; co-generation and renewable energy.

Silva said the investment included the start of construction of an advanced biofuels plant and 100MW electrolyser in Sines.

“Capex, not considering divestments, totalled N$21,5 billion in 2023. Upstream accounted for 53% of total investments, while the downstream activities represented 29%, and renewables and new business 13%,” he said.

Energy and natural resources lawyer Shakwa Nyambe said the recent oil and gas discoveries by Galp, as well as the earlier discoveries by Shell and Total Energies in Namibia, has sparked a global interest in Namibia’s hydrocarbon potential.

“I foresee a high number of mergers and acquisitions within Namibia’s upstream oil and gas sector in the next few years as junior and medium sized oil companies try to share the risk,” he said.

This comes after drilling and logging activities in Galp’s first exploration well, Mopane-1X, confirmed the discovery of two significant columns of light oil in reservoir-bearing sands of high quality in 2024.

“The rig was relocated to the second exploration well location, Mopane 2X, to evaluate the extent of the Mopane prospects, after which a Drill Stem Test is expected to be performed in Mopane 1X,” Silva added.

He noted that economic capex amounted to N$21,5 billion, mostly directed towards upstream’s growth, downstream transformation and renewables capacity construction.

The upstream segment of the oil and gas industry contains exploration activities which include creating geological surveys and obtaining land rights, as well as production activities which include onshore and offshore drilling.

“Investments in Portugal represented one third of total spending, mostly allocated to the Fund for Innovation in Development to two world-class projects in Sines, namely 100MW electrolysers for green hydrogen and an advanced biofuels unit, growth in electric mobility and modernisation of the retail network,” Silva said.

Meanwhile, net capital expenditure totalled N$17,6 billion, considering various inflows, while free cash flow reached N$28,1 billion, covering dividends and share buybacks.

The company reduced net debt to 1,4 billion euros (N$28,7 billion), reinforcing its financial position.

Nyambe said the oil and gas discoveries have also turned Namibia’s Orange Basin into a global hotspot for exploration activities, with multiple drilling rigs operating off-shore Namibia.

Galp operates Petroleum Exploration Licence 83 with an 80% interest, while the National Petroleum Corporation (Namcor) holds 10% and Custos Energy, half owned by Sintana, has a 10% stake.

– email: matthew@namibian.com.na