ReconAfrica updates operations on Namibia’s PEL 73, targeting major oil and gas prospects with Naingopo and Kambundu wells in the Damara Fold Belt. (Image source: Adobe Stock)

Reconnaissance Energy Africa Ltd. (ReconAfrica) has provided an update on its operations regarding Petroleum Exploration Licence 073 (PEL 73) in onshore Namibia

Brian Reinsborough, president and CEO of Reconnaissance Energy Africa, commented, "We continue to make progress on the drilling of the Naingopo exploration well on PEL 73 onshore Namibia. We have set our last casing point prior to drilling into the Otavi reservoir section. We encountered slower drilling rates in the deeper section of the Mulden formation and experienced tight hole conditions while setting casing, which has caused delays to our original schedule. As part of the planned drilling program, we are switching out the blowout preventer to 10,000 psi ahead of drilling deeper intervals. Drilling will commence in the coming days and we expect soon thereafter to penetrate the primary objective of the Damara Fold Belt play, the Otavi carbonate reservoir. We plan to be drilling through October before reaching total depth and will disclose well results after thorough analysis of the logs and any obtained fluids. Construction operations are proceeding on schedule to spud the Kambundu exploration well (Prospect P). This well is expected to spud following the completion of the Naingopo exploration well."

Exploration activities 

The Naingopo well targets 181 million barrels of unrisked prospective light/medium oil resources or 937 billion cubic feet of natural gas resources, based on the latest estimates from Netherland, Sewell & Associates, Inc. (NSAI). The well will be drilled to a depth of approximately 3,800 metres (12,500 feet) and is expected to encounter five Otavi reservoir intervals targeting both oil and gas. Success could unlock further drilling opportunities and potentially access multiple drill-ready prospects.

Construction of the access road and well pad for the second Damara Fold Belt exploration well, Kambundu (Prospect P), is progressing as planned, with drilling expected to begin in late November or early December 2024.

The Kambundu well (Prospect P) is also targeting significant resources, with estimates of 309 million barrels of unrisked prospective light/medium oil or 1.6 trillion cubic feet of natural gas, based on NSAI's report.

There is no guarantee that any resources will be discovered, and if they are, there is no certainty that they will be commercially viable. Prospective resources refer to the estimated recoverable quantities from undiscovered accumulations, and both discovery and development carry inherent risks.

In addition, the company has recently obtained an Environmental Clearance Certificate (ECC) to conduct a 3D seismic survey on PEL 73. The seismic program, targeting the Kavango Rift Basin play, is slated to begin in the first quarter of 2025.

Petrobras acquires a 10% stake in South Africa’s Deep Western Orange Basin block, aligning with its strategy to explore new oil and gas frontiers. (Image source: Adobe Stock)

Petrobras has secured a stake in the Deep Western Orange Basin (DWOB) block after successfully participating in a competitive bidding process organised by TotalEnergies

Situated in deep waters of the Orange Basin, the DWOB block has seen recent major discoveries by TotalEnergies, Shell, and Galp.

Following the acquisition, Petrobras will hold a 10% share in the DWOB block. The consortium overseeing the block will be composed of TotalEnergies, as the operator (40%), QatarEnergy (30%), Sezigyn Pty. (20%), and Petrobras (10%).

This move aligns with Petrobras' strategy to diversify its exploration portfolio, focusing on value creation. It supports the company's long-term objective of replenishing oil and gas reserves by exploring new frontiers in both Brazil and international markets, through strategic partnerships.

The acquisition adheres to all of Petrobras' internal governance and procedural standards, in accordance with its 2024-2028+ strategic plan, and is subject to local regulatory approval.

Rystad Energy highlights increasing breakeven costs in oil projects. (Image source: Adobe Stock)

According to Rystad Energy, the cost of developing new upstream oil projects continues to rise due to ongoing inflationary pressures and supply chain disruptions

Their latest research reveals that the average breakeven cost for non-OPEC oil projects has increased to US$47 per barrel of Brent crude, marking a 5% rise in just the past year. Despite these growing expenses, breakeven prices remain lower than current oil prices.

Offshore deepwater and tight oil projects are still the most economical new supply sources, while oil sands remain the costliest. By evaluating breakeven costs, Rystad Energy estimates future crude oil supply based on the economic viability of different sources. Despite the increasing costs, the research projects that more supply will likely emerge by 2030, primarily driven by low-cost OPEC production and the region's significant resource potential. The estimated equilibrium oil price for meeting a 2030 demand of 105 million barrels per day is approximately US$55 per barrel.

The study also offers a detailed global cost-of-supply analysis, breaking down remaining liquids resources into producing and non-producing fields, with the latter divided into various supply segment categories. Onshore production in the Middle East is identified as the least expensive source of new oil, with an average breakeven price of $27 per barrel and substantial resource potential. Offshore shelf follows at US$37 per barrel, offshore deepwater at US$43, and North American shale at $45. In contrast, oil sands production has an average breakeven of US$57 per barrel, with some projects reaching up to US$75.

"Rising breakeven prices reflect the increasing cost pressures on the upstream industry. This challenges the economic feasibility of some new projects, but certain segments, including offshore and tight oil, continue to offer competitive costs, ensuring supply can still be brought online to meet future demand. Managing these cost increases will be critical to sustaining long-term production growth,”remarked Espen Erlingsen, head of upstream research at Rystad Energy.

McDermott, Saipem, and China Petroleum Engineering win FEED contract for Mozambique’s Rovuma LNG project, advancing energy and economic growth in Africa. (Image source: Adobe Stock)

McDermott, in consortium with Saipem and China Petroleum Engineering and Construction Corporation, has been awarded the front-end engineering design (FEED) contract for the Rovuma LNG Phase 1 Project in Mozambique

The joint venture is between ExxonMobil Development Africa B.V., Eni S.p.A., and CNODC Dutch Cooperatief U.A.

The Rovuma LNG Phase 1 project marks a significant milestone for Mozambique, providing a considerable opportunity for economic growth. The project involves the liquefaction and export of natural gas from the Offshore Area 4 fields located off the Afungi Peninsula in Mozambique.

“LNG helps shape an entirely new era of energy solutions and McDermott plays a significant role in this global shift with more than 60 years of LNG experience,” said Rob Shaul, senior vice-president of McDermott's Low Carbon Solutions business. “McDermott is well established in Mozambique and can apply this knowledge and experience to continue the country's industrial, social and economic development.”

The FEED contract’s scope includes the modular design of a greenfield LNG production facility in Afungi, along with all related gas pre-treatment units, utilities, and offsite systems needed to support LNG production. The facility will have a total production capacity of 18 million tons per annum (MTPA). The contract also covers the engineering, procurement, and construction proposal.