Wood Mackenzie Warns Kudu Gas Project Faces Infrastructure and Demand Challenges Before Commercialisation
Offshore gas developments such as Namibia’s Kudu Gas Field face a longer and more complex path to commercialisation than oil projects due to extensive infrastructure requirements and uncertainty around long-term domestic demand, according to energy consultancy Wood Mackenzie.
Speaking at a recent energy conference in Namibia, Wood Mackenzie Research Director for Sub-Saharan Africa Upstream Ian Thom said offshore gas projects require far greater coordination across transport, processing and power infrastructure before production can become commercially viable.
“When we look at oil and gas, gas is often discussed in the same way as oil during the early stages of development, but the reality is very different. Gas has a much longer and more complex route to market.
It comes with more constraints, greater infrastructure requirements, and significant coordination challenges across the value chain,” Thom said.
He noted that the complexity increases further when gas is intended for domestic use rather than export markets.
“If the objective is domestic utilisation, the challenges become even greater. You need a pipeline to shore, onshore processing facilities, and integration into industrial and power demand.
Beyond that, the power market must be supported by reliable, creditworthy customers. Every part of the value chain must function effectively and align across multiple stakeholders,” he said.
According to Thom, the Kudu Gas Field would require an offshore pipeline of approximately 200 kilometres to transport gas to shore, placing a significant portion of the development responsibility on project operator BW Energy.
He added that global and African experience suggests offshore gas projects rarely create domestic gas markets on their own, particularly when located in deepwater areas far from major population centres or industrial hubs.
Wood Mackenzie’s analysis of approximately 15 African countries producing offshore gas found that eight first established domestic demand through smaller onshore or nearshore gas developments before expanding into larger offshore projects.
In a further five cases, offshore gas development was primarily driven by liquefied natural gas (LNG) export projects rather than the creation of domestic gas markets.
“Only a limited number of offshore gas developments globally have successfully built domestic gas markets directly from large offshore discoveries,” Thom said.
He noted that Kudu does not benefit from some of the favourable conditions seen in offshore projects located closer to shore or near large population centres.
“Kudu does not fall within the more favourable conditions seen in some offshore developments situated close to existing infrastructure and demand centres,” he said.
Thom suggested that one possible pathway for Kudu could involve smaller-scale associated gas projects that gradually build infrastructure and stimulate domestic demand over time.
He also highlighted the potential role of Namibia’s emerging offshore oil sector in supporting future gas development.
Early oil production could generate government revenues that help finance critical infrastructure investments required for large-scale gas commercialisation.
“In many cases, infrastructure such as pipelines, ports and electricity systems require early cash flows from oil developments before large-scale gas projects become economically viable,” Thom said.
He stressed that offshore gas commercialisation is rarely achieved through a single development phase.
“From our perspective, the most important point is that offshore gas commercialisation is not a one-step process.
It is usually a staged evolution, often beginning with oil developments or smaller gas projects before progressing towards broader infrastructure-led market growth,” he said.
According to Thom, Kudu should be viewed through a long-term development lens, with infrastructure readiness, market demand and project sequencing likely to determine its ultimate commercial success.
The comments come as the Kudu project remains in the late pre-development stage, with appraisal drilling and Front-End Engineering and Design (FEED) studies currently underway.
BW Energy is targeting completion of the field development plan by mid-2026, while a final investment decision is expected later this year.
The company aims to begin gas-to-power production near Lüderitz by 2027, initially generating between 400MW and 420MW of electricity, with the potential to expand capacity to approximately 800MW in the future.
