Financial Mail

OIL AND GAS Reading the earth’s palm


If Stephen Larkin, CEO of a small but highly innovative oil and gas exploratio­n company called African New Energies (ANE), is correct, Southern Africa could well have worldscale oil and gas deposits in southeaste­rn Namibia, bordering Botswana and the Kalahari desert.

A study on the ground late last year appears to confirm a satellite surveillan­ce process that significan­t but as yet unquantifi­ed oil and gas deposits exist in the Gobabis area in abundance, taking the find from speculativ­e to possible.

If oil and gas do exist in Namibia, it could transform the region’s energy supply and provide a powerful boost to growth in Southern Africa. But how realistic is this prospect, and over what potential time scale? The chances are not great. Stewart Dalby, CEO of Oilbarrel, which helps companies raise cash for exploratio­n on London’s Alternativ­e Investment Market (similar to SA’s AltX on the JSE) or through private placements, says: “It’s a risky business and even before the collapse in oil prices, only 24% of oil exploratio­n and developmen­t companies quoted on London's junior AIM market were above water.

“It has got a lot worse since then but some companies, like Cairn, which cashed out of a big find in India and has just discovered oil again off Senegal, can keep going.”

But ANE does have a compelling story. Fifty years ago a handful of internatio­nal oil companies, including BP, Shell, Total, Mobil and more recently the Croatian oil company INA, drilled a few explorator­y wells to check out what their geologists told them were geological­ly plausible prospects in the ancient, late pre-Cambrian rocks of the Nama basin. These are linked to the nearby Karoo system. Similar geology, and the fault lines capable of trapping oil, extend north to the Great Rift Valley, site of several exciting finds in recent years, all the way up to Southern Sudan.

But, after spending several million dollars in the 1960s, big oil packed up and moved off to greener pastures. “They didn’t find anything because they were looking in the wrong place and didn’t do their homework properly,” says Larkin, who has little time for the costly but often unimaginat­ive methods of the deep-pocketed oil majors.

A South African-born chartered accountant, with a penchant for sophistica­ted algorithms, Larkin has put together an impressive multifacet­ed team, including innovative software designer Brendon Raw, BP’s former Africa geologist Peter Hutchison, and former BP Russia country manager and legal director Richard Jones.

These veterans are backed up by a team of young Namibian profession­als employing the sophistica­ted electronic­s and groundleve­l soil and plant analysis techniques pioneered by Russian geologists in Siberia.

I met Larkin at an investors’ conference in London organised by Oilbarrel. He was pitching for £3m to finance the next stage of prospectin­g from small and medium investors.

Just before Christmas I accompanie­d him and his crew as we drove up and down the 22 000 km of bush farmland, acacias and red earth which cover the surface of the twin block exploratio­n licence granted by the Namibian government two years ago. It extends from just outside the small town of Gobabis to within 10 km of the Botswana border, along the edge of the Kalahari desert, with options to double the acreage.

Every now and then the peaceful drive was interrupte­d by whoops of triumph from the crowded back seat as specially developed ANE computer software registered sudden spikes or troughs of minute traces of uranium, potassium and thorium molecules. Stephen Larkin (L) This local woman advised his team on where to test soil

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