Portugal’s largest oil company, Galp Energia SGPS SA, is aggressively pursuing expansion opportunities in frontier markets across Africa as global demand for fossil fuels proves more resilient than anticipated. Board member Nuno Bastos revealed the company’s strategy during a briefing in Lisbon, citing geopolitical shifts and energy security concerns as key drivers behind the renewed focus on exploration.
“The world has changed,” Bastos explained, referencing the impact of the Russia-Ukraine war and widespread anxiety about energy security. “The energy transition is happening, but it will take more time than we thought. Europe still needs fossil fuels.”
Galp’s African portfolio has expanded significantly, with the company undertaking an exploration campaign in Namibia last year, where discoveries by oil majors such as Shell and TotalEnergies have drawn international attention. The company also holds licenses in São Tomé and Príncipe, an island nation off Africa’s west coast, where it recently partnered with Shell and Petrobras.
“Success rates in exploration are low, typically 10 per cent to 20 per cent if we’re optimistic, so we must pursue multiple licenses,” Bastos told reporters, emphasizing the need for a diversified approach to frontier exploration.
The strategy aligns with a broader trend among large oil companies stepping up investment in exploration as the global shift to cleaner energy remains bumpy, fuel consumption holds steady, and production declines from existing fields. Many producers are increasingly looking to high-risk, high-reward frontier regions that were previously underexplored.
Galp and its partners recently began production at Brazil’s Bacalhau field, its largest project to date. The deepwater deposit, where Galp holds a 20 per cent stake, can pump 220,000 barrels per day. “Bacalhau will allow Galp to increase its production by about 40 per cent,” Bastos said, adding that the block may generate approximately $400 million a year in free cash flow for the company.
In Namibia, the firm is in advanced talks with several parties to sell half its 80 per cent stake in the offshore Mopane field as it seeks to move from discovery to production as quickly as possible. “We want to have someone on board by the end of the year,” Bastos stated.
Taken together, Brazil, Namibia, and São Tomé and Príncipe present a balanced portfolio, with Bacalhau already producing, Namibia being appraised, and São Tomé offering long-term growth potential. Galp’s upstream division accounted for 63 per cent of group earnings last year, reflecting the company’s continued reliance on oil and gas production.
Bastos emphasized that cash flow from Bacalhau and future upstream projects will help finance investments in renewables, biofuels, and hydrogen. “We’re not addicted to oil, we’re experts in developing complex energy projects,” he said. “We’ll keep doing what we do well while investing in the next generation of energy.”
Source: worldoil.com