Why Gas Is Holding Up the Oil
The Orange Basin Situation
The Orange Basin off Namibia’s coast holds a lot of oil, but it also brings a large amount of natural gas. When Shell looked at its Namibian finds in early 2025, it decided the discoveries were not commercial because dealing with the gas would be too costly. TotalEnergies, however, sees a way forward. Its Venus project plans to pump the gas back into the reservoir to help push the oil out, with no intention of selling the gas. The company already exports liquefied natural gas (LNG) from Angola and Nigeria, so it treats the Namibian gas as a remote resource that is better left underground. This approach keeps production costs near $20 per barrel, but it means Namibia’s potential power source stays locked away.
Windhoek’s Push for Infrastructure
The Namibian government has urged the major oil companies to share facilities and bring the gas ashore for processing and local power generation. The Venus decision is the first real test of that pressure. TotalEnergies says a final choice must come before 2027, when current contractor tenders expire, though no public announcement has been made yet. In July the authorities approved a swap that makes TotalEnergies the operator of both Venus and the nearby Mopane field. This concentrates Namibia’s negotiating power with a single partner and could make it easier to organize a joint gas‑handling scheme—a point that analysts infer, though the company has not stated it directly.
Kudu, the Long Rehearsal
Kudu shows how slowly gas projects can move. Chevron discovered the field in 1974, and it has remained idle ever since. BW Energy now holds 95 percent of the stake, with Namcor owning the remaining 5 percent. The investment decision has been pushed from 2024 to 2025 and now to late 2026. BW has also scaled back the original plan from an 800‑megawatt power station to a modular plant that could produce between 200 and 400 megawatts. A 2023 well called Kharas‑1 found liquid hydrocarbons, which improves the project’s economics.
According to Wood Mackenzie, offshore gas rarely creates a domestic market on its own. Of roughly 15 African offshore gas producers, eight started with smaller onshore or near‑shore projects, and five began with LNG exports. BW’s schedule should be viewed with caution. The firm talks about first power near Luderitz around 2027, but BW has previously said that first gas would follow an investment decision by 30 to 40 months. If the decision comes in December 2026, first gas would likely arrive around 2029‑2030.
The Market Namibia Is Walking Into
Timing is crucial because the global LNG market is filling up. The International Gas Union expects about 170 million tonnes of new liquefaction capacity each year between 2026 and 2028. A Namibian export project would therefore arrive late and would need to prove it is both cheap and low‑carbon. Shell still forecasts global LNG demand rising roughly 60 percent by 2040, so a window remains, but it is narrowing.
Regional demand looks steadier. Namibia imports more than 60 percent of its electricity, and surplus power from Kudu could be sent through the Southern African Power Pool. South Africa has the clearest need: nearly 90 percent of its gas demand is met by Sasol, and Standard Bank warns of a “gas cliff” in June 2028 when Sasol’s Mozambican supply to third parties ends. The SADC gas master plan highlights a Walvis Bay‑to‑Cape Town corridor as a priority, which Western Cape industry should watch. However, turning paper demand into a financed pipeline requires South African buyers to sign long‑term take‑or‑pay contracts.
What Would Make It Bankable
CDH’s main argument is that gas needs a full package, not just a licence. The list reads like a record of past failures and includes:
- Gas sales and power purchase agreements
- Grid and transmission arrangements
- Government support undertakings
- Lender direct agreements
- Clear rules on pipeline ownership and usage
Namibia’s draft Gas Bill, which would regulate midstream and downstream activities, and the upstream local‑content policy will shape these contracts.
Namibia’s strongest lever is timing. It can write gas‑handling terms into the Venus fiscal deal before the decision on reinjection is locked in. Its weakest point is size: a country of about three million people cannot alone anchor a major pipeline. The upcoming Venus talks and the Kudu investment decision—both due before the year ends—will reveal whether Namibia treats gas as a core part of its energy architecture or as an afterthought.
Conclusion
Namibia sits on a valuable but challenging mix of oil and gas. While companies like TotalEnergies prefer to keep the gas underground to cut costs, the nation’s leaders see an opportunity to power homes, support regional grids, and create jobs. Success will depend on aligning fiscal terms, securing power and sales agreements, building the needed transmission links, and convincing regional buyers to commit long term. If Namibia can turn its gas from a hidden obstacle into a planned asset, it could transform its energy future and help drive growth across southern Africa.
