Namibia Optimistic About Energy Future

  • Namibia’s Minister of Mines and Energy H.E. Tom Alweendo and Executive Chairman of the African Energy Chamber NJ Ayuk united in an exclusive webinar on Friday.
  • ‘The Future of Namibia’s Energy Industry,’ addressed the country’s exploration potential as a future oil and gas producer; key project updates, including on the Kudu gas field; renewable energy development; and more.
  • The webinar was hosted by Africa Oil & Power, in partnership with the African Energy Chamber.

 Cape Town, South Africa, Friday, May 18, 2020 – Namibia’s Ministry of Mines and Energy expressed confidence in its exploration prospects in an exclusive webinar on Friday, with a view toward catalyzing oil and gas as a tool for sustainable and inclusive economic growth.

Under the theme, ‘The Future of Namibia’s Energy Industry,’ the webinar was led by Minister of Mines and Energy H.E. Tom Alweendo and Executive Chairman of the African Energy Chamber, NJ Ayuk.

While Namibia does not yet produce any oil, it is estimated to contain up to 11 billion barrels of recoverable reserves off its shores, with first production planned for the mid-2020s and renewed interest sparked from major operators, including Total and ExxonMobil.

 “We have six major companies exploring our sector, and by January or February of next year, we will have four wells that will be drilled,” said H.E. Minister Alweendo. “So far, we have not had any companies that will not go ahead with drilling programs because of COVID-19. We are monitoring the situation and engaging with each other. Through that engagement, we want to ensure that plans are not derailed. If there is any lesson learned from COVID-19, it is that we need to have a dialogue. If we react without talking to each other, then we will prolong the problem.”

As existing producers in the region continue to develop their hydrocarbon resources, the need for Namibia to remain fiscally competitive in the face of a sub-$30 barrel price and finite foreign direct investment remains imperative.

“Namibia has the potential to discover huge amounts of petroleum and gas,” said NJ Ayuk. “It just needs one discovery and everyone will be chasing it. However, Namibia is not just competing with Nigeria and Angola, but also with Guyana – which will be producing 400,000 barrels per day – and in attracting the same dollars that are going to Mozambique, Tanzania and Senegal. In an era of climate change, limited dollars are going to fossil fuels, so you have to be attractive. The private sector is saying, ‘Please get Kudu gas going so that we can start telling the story.’”

Estimated to contain up to 1.3 trillion cubic feet of proven natural gas reserves, the offshore Kudu gas field could be critical in meeting Namibia’s growing energy demand and mitigating its current power crisis. However, the development has been stalled between the government and BW Energy, operators of the Kudu gas-to-power project license, over the proposed business model for the development.

“Because of the other discoveries in gas-to-power, the developing model proposed for the Kudu gas field was not going to work, as either capital or physical concessions of the government were required,” said H.E. Minister Alweendo. “Therefore, we agreed to find another model to develop the field, in which the government is not involved in that way. We have not had formal engagement yet since last year to get the project off the ground, but it certainly is still a potential development with immense economic benefit.”

Because of its status as a non-producing economy, the impact of COVID-19 has been mostly confined to lowered consumer prices of petroleum derivatives and a sluggish global economy.

“Within the last two months, we were able to lower the price of petrol and diesel,” said H.E. Minister Alweendo. “However, at the same time, the exchange rate between the Namibian dollar and the U.S. dollar has deteriorated, to the extent that the impact on the foreign exchange rate and the price of petrol is canceling each other out. But we are still able to benefit from a lower price of refined products. Even as a consumer, as small as we are, we have a role to play. COVID-19 has brought the consumption of energy down, and the role that consumption plays is how quickly we can get the economy back on stream.”

The Minister also unpacked Namibia’s renewable energy potential during the webinar. While Namibia is a leader in renewables within the region and the continent, with approximately 65% of its energy derived from hydropower and 8% from other renewables, global demands for cleaner energy sources will not stop the country from pursuing the development of fossil fuels.

 “It should not be an ideological argument – to save the environment or not, as if there are those who want to destroy the environment,” said H.E. Minister Alweendo. “There are countries that need to develop their economies and need to have energy to be able to do that, with fossil fuels in their mix. I do not see what is wrong with that. It will put countries in a much better position tomorrow to save the environment than if they were left unable to develop. That said, I understand that in the long run, the fossil fuel industry needs to do more in terms of improving technologies, such that their impact on the environment is not what it was 30 years ago – and that is happening.”

Going forward, Namibia will continue to prioritize its drive for foreign direct investment in its emerging oil and gas industry, seeking to utilize its hydrocarbon resources as a tool for economic growth and prosperity.

 “The future of the Namibian energy sector is bright,” said H.E. Minister Alweendo “There are very positive and encouraging signs when we talk about hydrocarbons. On the renewable side, we were able to introduce reforms over the years that made it possible for Independent Power Producers to come into the sector and produce, especially solar and wind. At the end of the day, policy provision or policy investment should be impactful for human beings, so that what we are doing has a positive impact on their lives. We will continue to engage investors, and ask that what we do is mutually beneficial for investors and the Namibian people.”