Why Africa’s Largest Untapped Oil Field Has Yet to Flow

Core Insights - TotalEnergies has revised its production strategy for the Venus project in Namibia, lowering peak output expectations from 200,000 barrels per day to 150,000 barrels per day, focusing on sustaining production over a longer period rather than rapid early gains [1][3] - The Venus field, discovered in February 2022, is one of Africa's largest oil discoveries, with an estimated 1.5 billion barrels of light crude and 4.8 trillion cubic feet of natural gas, potentially increasing Namibia's GDP by up to 20% by 2030 [3][4] - Negotiations between TotalEnergies and the Namibian government are ongoing, with concerns about fiscal terms and the need to avoid unfavorable contracts similar to those seen in Guyana [4][10] Production and Economic Considerations - The project is technically challenging, located 3,000 meters underwater and 300 kilometers from shore, complicating gas production and reinjection strategies [2][5] - TotalEnergies has indicated a breakeven price of $20 per barrel, but this figure is viewed as a negotiation tactic rather than a realistic assessment, with comparable projects typically around $35 per barrel [5][6] - The exit of Shell from the region due to poor reservoir quality and high gas content highlights the risks associated with the Venus project [6] Strategic Context - Namibia is positioning itself as a new energy hub, with plans for a $10 billion green hydrogen project alongside oil developments, indicating a diversification strategy [7][8] - TotalEnergies' operations in Africa account for half of its production and the largest share of its exploration budget, with a focus on LNG and offshore oil [8] - Geopolitical factors, including China's growing investment in Namibia, introduce strategic risks for TotalEnergies, as delays in negotiations could allow competitors to gain a foothold [9][10] Future Outlook - The success of the Venus project hinges on overcoming technical challenges, negotiating favorable fiscal terms, and navigating geopolitical dynamics [10] - If successful, Venus could significantly enhance TotalEnergies' cash flow and redefine Namibia's economic landscape, but failure to reach agreements could stall progress [10]