‘Two to tango’: Pouyanne begins fiscal dance with Namibia...

‘Two to tango’: Pouyanne begins fiscal dance with Namibia president to boost returns on Venus project

"TotalEnergies has kicked-off talks with Namibia's new government to improve the profitability of its challenging, ultra-deepwater Venus project in the Orange basin, which could be the country's debut oil and gas project. Venus lies in 3000 metres of water and has a low-permeability reservoir with big volumes of natural gas that have to be reinjected. The supermajor's goal is to develop the field via 40 subsea wells tied back to a floating production, storage and offloading vessel designed to handle 150,000 barrels per day of oil and 550 million cubic feet per day of gas. TotalEnergies' current plan is to take a final investment decision in 2026, targeting first oil in 2029 or 2030, but only if it can drive breakeven costs below $20 per barrel.

Last week, in his first visit to Namibia, Pouyanne met the country's newly installed President Netumbo Nandi-Ndaitwah in Windhoek to raise the issue of Venus' challenges and the requirement for the project to meet the company's internal rate of return (IRR) hurdles. Speaking to analysts in the company's first-quarter results call on Wednesday, Pouyanne said that while Venus is not a small oilfield and holds about 750 million barrels of recoverable oil, it has inherent characteristics that pose cost-related headaches when it comes to its development. "It's a project which faces, fundamentally, some challenges. It's feasible. We have quite a lot of oil, something like 750 million barrels of oil, so it's quite a big pool of oil." However, he stressed that the reservoir's permeability — of 2 to 4 millidarcies — is low, which means that when gas is reinjected into the reservoir, it will generate a longer-than-normal production plateau. "So we need to have a long license to produce 750 million barrels of oil," said Pouyanne.

In addition, he highlighted the expense of installing a big subsea system in three kilometres of water as being another challenge. "I expressed to the government that we have some thresholds in terms of IRR targets and that I need to protect the project in case the price of oil goes down." He also noted that if Venus is Namibia's first project — Galp Energia, Rhino Resources and BW Energy are also working on developments — the company will have to invest in new offshore support activities. "We could be the first mover which means some additional costs because of logistics, so the authorities have also taken that into consideration," said Pouyanne. "I think it's a matter now to find a common ground between us and the authorities." Pouyanne said the project will move ahead "if we find a fitting return (IRR) target," pointing out that he would not have visited Namibia if there was no possibility of finding common ground. However, he nonetheless cautioned: "We need to have two persons to dance a tango."

Pouyanne sees similarities between Venus and the company's $9 billion, 220,000 bpd, gas-rich GranMorgu project in Suriname where he negotiated with the Paramaribo government to improve the project's profitability. This project — the country's first — is being developed by 32 subsea wells located in up to 1000 metres of water and tied back to an FPSO. "I see a very similar situation than the one we had in Suriname one year ago, where at the end of the day we found a way to find a common ground between the government and ourselves in order to be able to move forward the project," said Pouyanne. While it is early days in the talks with Namibia's government and Pouyanne did not expect definitive answers at last week's meeting, he appears confident there will be a positive outcome. "I have noticed there is a will in Namibia to open the oil and gas industry," he said."