Namibia Whets Lundin Family's Interest

Amid global cuts in exploration spending, Toronto-listed Africa Energy Corp (AEC) has acquired a 10% interest in Namibian licence PEL 37, marking the firm's entry into the country’s offshore. But the search is for oil, with a proven offshore gas field still viewed as too marginal for development.

AEC agreed this week to pay Australia-based Pancontinental US$1.7mn for the interest, plus an extra $4.8mn upon spud of the first exploration well on the 17,295 km² licence. AEC is controlled by Sweden’s Lundin family, whose Lundin Petroleum operates Norway's big Johan Sverdrup oil development.

Subject to the farm-out approval, Pancontinental will retain a 20% interest in Namibia’s PEL 037 and says its stake is “fully carried by [UK-based Tullow] through ongoing activities and drilling of the first well.” Tullow chose not to withdraw from the licence on April 5 and now has a 65% interest. Paragon Oil & Gas holds the remaining 5% interest. James Phillips, AEC's CEO, said that PEL 037 has oil-prone source rock that was proven by the 2013 Wingas-1 well -- drilled by Brazil’s HRT in an adjacent PEL 023 -- which recovered light oil.

Map credit: Pancontinental (from a recent corporate presentation)

Elsewhere in Namibia, UK-based Tullow Oil and partners relinquished the Kudu offshore gasfield in 2015 after deciding it was uneconomic to develop. State firm Namcor has taken over the asset and tried to kickstart its development, so far without success.

On July 7, the Namibian High Court cleared an LNG import/250 MW power plant project to be developed at Walvis Bay by South Africa's Xaris Energy, following a challenge from would-be rival developer Arandis Power, although a final investment decision is believed to be still pending.

AEC acquired a 90% interest in South Africa’s offshore block 2B in October where a 1988 by former South African state firm Soekor found light oil that was not developed. “Follow-up wells will target its potential,” said AEC.

Mark Smedley