Texaco Namibia takes over operation of Kudu gas project

Nov 19, 2002 01:00 AM

The Kudu gas project off Namibia's southern coast received a new lease of life when ChevronTexaco announced that its Namibian branch, Texaco Namibia Resources, had taken over its operation. Texaco Namibia will now hold a 60 % share of the project while Cape Town-based Energy Africa owns the remaining 40 %.
Texaco Namibia and Energy Africa both previously had 12,5 % shares in the project. The new deal was announced in a press release from ChevronTexaco. The project received a serious blow three months ago when Shell Exploration and Production Namibia (SEPN), who had a majority 75 % share, withdrew after findings from a number of test wells proved disappointing.

Shell said that the exploitable reserves discovered during the drilling of four test wells would not be sufficient to support an export scheme. There were enough exploitable reserves to support a local power station, but Shell said it thought such a scheme would not be viable.
At the time, ChevronTexaco and Energy Africa said they would review their interest in the project. ChevronTexaco spokesperson Jonathan Lifa said they will work with Energy Africa to evaluate the commercial viability of the Kudu field and consider mutually beneficial development options.
"As part of this effort, additional studies will be carried out to access the field's gas resource base and the regional gas markets," Lifa said.

Shell acquired the Kudu licence in 1993 and had invested some $ 140 mm (about N$ 1,4 bn at the current exchange rate) in carrying out appraisal activities for natural gas and to research development options in the field.
The initial plan to exploit the Kudu gas field involved an investment of at least N$ 6 bn. Natural gas would be piped 700 km from the Kudu field to the Western Cape and to Oranjemund for use in power stations.

The project suffered a setback in January 1999 when Eskom said it was withdrawing from the joint venture, citing the high cost of producing the power compared with other sources. In 2001 a proposal was put forward to export the gas in liquefied form using tankers, rather than through a pipeline.
Early estimates had said gas reserves were sufficient to meet the current electricity demands of the Cape metropolitan area for more than 200 years. But even in the early days, some industry observers had their doubts. Industry magazine Hart's Africa Oil and Gas said several years ago that conclusions about the significance of the first wells were not that clear, with only a thin zone of the vast field seeming to be financially viable.

Source: The Namibian
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