Chevron deal strengthens exploration prospects on Namibia’s PEL 90, says AEC

Chevron’s planned acquisition of a 10% stake in Namibia’s PEL 90 licence from Custos Energy subsidiary Trago Energy will strengthen the international partnership behind the Orange Basin block ahead of a planned exploration well, the African Energy Chamber (AEC) said.

Trago has agreed to transfer its interest to Chevron (NYSE:CVX) affiliate Harmattan Energy for $11mn in cash at completion, with additional payments linked to appraisal and commercial production milestones. Completion remains subject to government, regulatory and third-party approvals.

The AEC said the transaction allowed Custos, a Namibian company, to realise value from its interest while reducing its direct funding and capital exposure. Trago will retain financial participation in potential future success through the contingent payments.

PEL 90 covers about 5,433 square kilometres offshore in the Orange Basin. Chevron operates the licence alongside QatarEnergy, Equinor (NYSE/OSE:EQNR) and state-owned NAMCOR. Following the planned transactions, Chevron will hold 45.1%, QatarEnergy 27.5%, Equinor 17.4% and NAMCOR 10%. Chevron agreed in August to transfer a 17.4% interest in PEL 90 to Equinor, bringing the Norwegian company into Namibia’s offshore sector. The transaction remains subject to approvals.

According to the AEC, the immediate focus is the Nabba-1X exploration well, which Chevron is preparing to drill on a prospect linked to the broader mid-Cretaceous sandstone play. The play has produced major discoveries elsewhere in the Orange Basin.

Recent discoveries by TotalEnergies (EPA/NYSE/LSE:TTE), Galp (Euronext Lisbon:GALP), Shell (LSE/NYSE:SHEL) and QatarEnergy have increased interest in Namibia’s offshore acreage and attracted major international companies to the basin.

“Custos Energy’s agreement with Chevron demonstrates how Namibian companies can create value from the country’s natural resources while helping attract international investment and technical expertise into the upstream sector,” said NJ Ayuk, executive chairman of the AEC. “The continued development of PEL 90 demonstrates the importance of maintaining exploration momentum while creating opportunities for Namibian companies.”

The transaction is also expected to generate a local education benefit. Once completed, the Knowledge Katti Foundation will contribute NAD10mn (about $600,000) to the University of Namibia Foundation to support construction of a new campus in Walvis Bay. The foundation has previously supported more than 120 Namibian university students.

The AEC said continued exploration could create opportunities for Namibian businesses and workers in drilling, engineering, logistics, fabrication and other oilfield services as the country’s upstream sector develops.

According to the NewsBase Horizon analyst team, Namibia’s main challenge is to turn its offshore discoveries into commercially viable projects while developing the skills, infrastructure and local businesses needed to retain more value from the investment cycle. The country will need to maintain investor confidence and attract international capital and expertise without allowing local participation to become purely a compliance exercise. A clear focus on competitive sectors, workforce development, infrastructure and transparent management of future petroleum revenues could help Namibia use its emerging oil and gas industry as a foundation for broader industrial and economic growth.