The emerging East African oil producer – which hosted its own Country Spotlight Session at African Energy Week 2022 in Cape Town – offers one of the most diversified outlooks on the continent for the development of its energy industry.
“Our ambition is to become the energy capital of Africa,” opened Nangula Uaandja, CEO of the NIPDB. When talking about the transition, there is room for fossil fuels and room for meeting net zero. These are not mutually exclusive. We are committed to the needs of the environment, while at the same time meeting the needs of our people.”
“Why Namibia? When it comes to cost-effective green hydrogen, the curve is much steeper than the gas sector,” noted Jonathan Metcalfe, Business Case Development Manager for Hyphen. “As a result, we need to focus on the quality of the resource and bankability of the project. This project is a combination of a high-quality resource in a very stable country, with high instability. Namibia is one of the world’s lowest-cost producers. This means a much lower deployment of resources compared to normal hydrogen or energy developments.
Following the presentation from Hyphen, a panel was held and moderated by Hilda Basson-Namundjebo, Managing Director at Oxygen Communications, and comprised Metcalfe; Francois van Schalkwyk, Executive Director of the NIPDB; Kahenge Haulofu, Managing Director, NamPower; Shakwa Nyambe, Managing Partner, SNC Incorporated; Scot Evans, CEO of ReconAfrica; Paul McDade, CEO of Afentra; Ejike Egbuagu, CEO of Moneda Investment Africa; Eric Williams, Principal Consultant, Royal Triangle Energy Solutions; and Pinehas Mutota, General Manager, Economic Regulation, ECB.
While Namibia does not yet produce oil, its offshore basins bear an uncanny resemblance to Brazil’s prolific pre-salt oil fields and have yielded several discoveries driving further offshore development interest. Earlier this year, both Shell and TotalEnergies made commercial discoveries in the Graff and Venus prospects, respectively, estimated to hold billions of barrels. The country is also home to the Kudu gas field development and gas-to-power project, which is being developed by BW Energy to transport gas by pipeline to an 800 MW power station in southern Namibia.
“The discoveries we have at this stage are just the beginning of an era, in terms of the potential for the hydrocarbons we have as a nation,” said Maggy Shino, Petroleum Commissioner, Ministry of Mines and Energy Namibia. “The geology of Namibia has been tricky. Our first well was a hit with Kudu gas, but the following wells were not a success. We have an environment with a volcano, which sent our investors on a goose hunt chase. Now, we have managed to resolve that puzzle and open up that play. Our strategy is to drive exploration so that we can replicate the success we have in the Orange Basin.”
“We need to focus on the value chain that creates production,” said Ejike Egbuagu, CEO of Moneda Investment Africa. “We are operating in a market where yield is very scarce. Namibia is channelling investment into pockets of opportunity, bringing the capacity from other countries like Nigeria, Uganda and Angola, and working in partnership with Namibian companies to participate in first oil. There will be a lot of activities going up to first oil.”
Opportunities for advancements in generation, transmission and distribution are also ripe within Namibia’s power sector, with the country currently importing around 60% of its energy needs and remaining heavily reliant on the Southern African Power Pool. In addition to the works being undertaken by BW Energy at Kudu, the state-owned Namibia Power Corporation has made efforts to upgrade the national grid network and create a regulatory framework that incentivizes Independent Power Producers (IPPs).
“In the electricity sector, we are seeing the market open up,” said Pinehas Mutota, General Manager, Economic Regulation, ECB. “The market has been liberalized so that independent producers can sell their electricity directly to larger producers. Namibia also allows for export. We have vast energy resources and the electricity we can generate cannot only be absorbed in Namibia. South Africa, for example, has a deficit of 15 GW.”
“A lot of intermittent power is expected to flow into the national grid,” said Kahenge Haulofu, Managing Director, NamPower. ” NamPower has not been idle. We are expanding and strengthening our grid, and if you travel to Namibia, you will see the rollout of huge transmission infrastructure on the ground. Discoveries of oil and gas only add to our excitement to be able to generate electricity and keep supply sufficient.”
While foreign investment in the Namibian energy sector has been limited to date, the country has undertaken several reforms to create more attractive operating conditions and a more business-minded regulatory framework. The Ministry of Mines and Energy also has plans to reform Namibia’s upstream and downstream petroleum legal framework to consolidate all current amendments into a single document and finalize the Local Content Policy and regulations, among other key provisions.
“As much as we want to fast-track the appraisal of development, we should not forget about fast-tracking local content mechanisms and policy,” said Shakwa Nyambe, Managing Partner, SNC Incorporated. “We need to do a market analysis and understand what skills we do and do not have and what kind of services to bring to the Namibian workforce. We must have a strong implementation of strategy, monitoring and evaluation. This will make the industry inclusive.”
“Local content has two parts: forward and backward linkages,” said Eric Williams, Principal Consultant, Royal Triangle Energy Solutions. “The backward linkage is jobs and services in the local economy. Forward linkage has to do with beneficiation – the added value to the raw material that is farmed in your country. The difference between high- and low-income countries is that the highest contributor to GDP in low-income countries is agriculture, while in high-income countries, it is services.”
“Namibia’s policies aren’t necessarily the same as the rest of the region. It’s about working with investors that understand what the operating environment is like and about creating confidence in the systems, processes and institutions,” added Francois van Schalkwyk, Executive Director of the NIPDB.
The Country Spotlight was concluded with presentations by Bridget Venner, Namibia Lead Country Manager, ExxonMobil; Klaus Andersen, General Manager of BW Kudu; and Immanuel Mulunga, Managing Director of NAMCOR.
African Energy Week (AEW)