Oil Daily | New Zealand to Reverse Offshore Exploration Ban; Namibia Targets Major Oil Production by 2035

【Latest Oil Policies】

In a bid to bolster energy security, New Zealand intends to pass legislation by the end of 2024 to reverse a ban on offshore oil and gas exploration that has been in place since 2018, the government said on Monday. The cabinet has committed to act with urgency to reverse the ban and remove regulatory barriers to the construction of critically needed facilities to import Liquefied Natural Gas (LNG) as a stopgap. New Zealand also plans to ease restrictions on electricity lines companies owning generation and improve electricity market regulation, the government said in measures outlined in an urgent action plan to boost energy security.

Earlier this year, the coalition government said it would introduce a bill in Parliament in the second half of 2024 to remove the ban on petroleum exploration beyond onshore Taranaki as part of a series of proposed amendments to the Crown Minerals Act.

New Zealand’s natural gas production dropped by 12.5% in 2023 and by a further 27.8% for the first three months of this year, creating a nationwide shortage, according to government estimates. This has resulted in reductions in manufacturing output, while electricity generators have resorted to using more coal and diesel to power the electricity system.

“New Zealand currently has an energy shortage. The lakes are low, the sun hasn’t been shining, the wind hasn’t been blowing, and we have an inadequate supply of natural gas to meet demand,” Energy Minister Simeon Brown said in a statement. The inadequate energy resources have pushed up wholesale electricity prices, which are “devastating for our manufacturing and export sectors, and is sadly leading to firms reducing production or closing entirely,” Brown added.

Resources Minister Shane Jones noted, “Oil and gas explorers need to have the confidence to invest here and know they will have a key place in New Zealand’s energy sector now and into the future.”

【Oil-Producing Countries Dynamics】

Namibia has ambitions to become one of the largest oil producers in Africa by 2035, with an average output of half a million barrels daily, displacing Egypt in the top five list, a government official has said. “With four floating production storage and offloading units deployed by 2035, we could be producing more than half a million barrels per day of oil equivalent,” Ebson Uanguta, interim managing director of the National Petroleum Corporation of Namibia, said at an industry event, as quoted by China’s Xinhua.

Several significant oil and gas discoveries were made recently in Namibian waters, with supermajors tapping an estimated 11 billion barrels of oil in offshore resources, with first production expected in 2030. Shell and TotalEnergies are the leading investors in Namibia's oil future, along with Qatar Energy and a UK-listed Australian driller by the name of Global Petroleum. Chevron, Portugal's Galp, and Rhino Resources are also exploring for oil in the country's Orange Basin.

Earlier reports pegged the country’s oil and gas production capacity at 700,000 bpd as of 2030—the year that commercial production should begin. Two discoveries in particular could transform the country into not only a new oil producer but a major one, as they are estimated to contain billions of barrels in oil and gas. One of these is Shell's Graff discovery, which could hold as much as 1.7 billion barrels of oil and gas across three wells, according to Barclays estimates.

The other major discovery is TotalEnergies' Venus, which is even bigger than Graff, with reserves seen at up to 3 billion barrels of oil equivalent. Portugal’s Galp, meanwhile, earlier this year struck hydrocarbons at the Mopane discovery, which the company said could contain 10 billion barrels of oil equivalent or more. This would essentially dwarf the Shell and TotalEnergies discoveries, if proven, and make Namibia an even more attractive oil development destination.

【Global Oil Supply and Demand】

The spot market price of liquefied natural gas in Asia is on the decline amid signs that seasonal demand for the fuel is peaking. Last week saw the first weekly decline in Asian spot LNG prices in a month, Reuters’ Clyde Russell reported, noting however that prices are still over 66% higher than they were at their trough this year in March.

Asia is the biggest import market for LNG featuring big buyers such as Japan, India, and China. China was the one that drove prices higher earlier in the year as greater demand for air-conditioning prompted higher demand for gas for generation. In China specifically, LNG demand is on the rise due to an accelerating switch from diesel to the cleaner fuel for trucks, earlier reports have suggested.

This month, Asian imports of liquefied natural gas are set to hit a total of 25.03 million metric tons, according to Kpler data cited by Reuters, which would be an increase from July’s 23.86 million tons. China has imported an estimated 6.94 million tons this month, the highest monthly total since January and up from 5.91 million tons in July.

Japan, the second-largest LNG importer in the world, bought 5.83 million tons of the superchilled fuel this month, up from 5.45 million tons in July. South Korea’s LNG imports also rose in August, to an estimated 3.86 million tons, which was up from 3.16 million tons in July.