Baker Hughes builds first Namibian mud plant as exploration surges

Source: Market Screener

CAPE TOWN (Reuters) - Energy technology company Baker Hughes will construct a new liquid mud plant, and a separate assembly, maintenance and repair base at Namibia's Walvis Bay to cater to booming offshore exploration activities, a senior executive said.

The project will help Namibia cope with an influx of drill rigs and support vessels that threatens to overwhelm its only two commercial ports, Walvis Bay and the smaller Luderitz, as they battle congestion and inadequate facilities.

"It will be drilling fluids made in Namibia for Namibian wells, an important step in building its oil and gas industry," Tokunbo Azeez, executive director Baker Hughes Sub-Saharan Africa told Reuters of the country's first mud plant, expected to open by September.

Liquid mud plants (LMP) are a vital cog in offshore exploration work, producing, storing and delivering synthetic oil-based "mud" and brines used during drilling to help prevent dangerous blow-outs and friction.

Namibia, which has not yet produced any oil or gas, has become an exploration hotspot after offshore discoveries by TotalEnergies, Shell and more recently Galp Energia.

Oil companies are importing drilling fluids from Angola and can wait weeks for delivery, inflating costs and risk at their operations, Azeez said.

At Luderitz, which the government has earmarked as an energy hub, the national ports authority, Namport, is seeking debt co-funding of N$1.2 billion ($64.5 million) to extend its quay wall by at least 300 metres to accommodate more platform support vessels. The total cost is estimated at N$2 billion to N$2.5 billion.

TotalEnergies' offshore operations are supported from Luderitz port, while Shell and Galp are buttressed from Walvis Bay as new players including Chevron are set to start exploration soon, said Namport CEO Andrew Kanime.

"If we extend it, (the quay wall) will then enable us to maybe double or even triple berth availability," he told Reuters.

Berthing capacity at the physically constrained port, where fishing and mining cargoes vie for space, stands at 95%.

Planned construction will likely be delayed to early next year as Namport awaits the necessary environmental and archaeological authorization, Kanime added.

(Reporting by Wendell Roelf. Editing by Gerry Doyle)