Elections a worry to oil investors

The presidential and National Assembly elections may lead to various international oil companies delaying final investment decisions (FID) on several projects they may want to pursue.

The view is contained in Cirrus Capital’s economic outlook for the rest of the year.

“While commerciality of the discoveries is still being determined, we believe that FID may be delayed until after the first quarter of 2025. Reasons for this include revisions underway to the Petroleum Act and potentially the fiscal regime, with these investors understandably wanting certainty,” Cirrus said.

“Additionally, many firms are likely awaiting the outcome of Namibia’s November 2024 elections, particularly as the results in South Africa’s May elections will cause some apprehension and may rather warrant a wait-and-see approach,” it added.

Cirrus said exploration activities were also likely to slow in the winter months, owing to difficult operating conditions.

“Winter is less ideal for drilling activity, given strong ocean currents and adverse weather conditions. The lull in activity in mid-2024 will likely negatively impact economic growth to some extent. However, increased activity from late 2024 and increasing from early 2025 should drive strong growth here again."

Namibia holds about 11 billion barrels of oil in recently discovered offshore fields, with TotalEnergies' Venus-1X find making up almost half of the total, state-owned oil firm Namcor said in a presentation of preliminary data.

The country, which has not produced any oil or gas yet, has become a global exploration hotspot after deep water discoveries by Shell and TotalEnergies over the last two years.

Oil companies including Chevron, ExxonMobil and Galp Energia are also conducting exploration and appraisal activities.

The raft of discoveries could make Namibia a top 15 oil producer by 2035, Namcor said, with an opportunity to double the country's gross domestic product (GDP) per capita in less than a decade.