By:Nghiinomenwa-vali Erastus
The government is entitled to receive a share of any successful petroleum project once production has started, said the acting Managing Director of the National Petroleum Corporation of Namibia (Namcor) Shiwana Ndeunyema.
In a presentation titled,“The Economic Impact of the Oil & Gas Discoveries on Namibia” last week, Ndeunyema said the country will directly benefit from the country’s discovery of oil and gas, with the benefit calculated to take up 54% of the industry.
The income is expected to be generated through royalty at 5% and petroleum income tax at 35%.
The Namcor stake in all the petroleum exploration licences, which is the carried interest until production is at 10%, which means the Namibian government is not required to provide funds for the exploration and development phase which could run into billions of dollars.
There is also an additional profits tax rate of 5% -12% on the oil and gas companies. This is, however, negotiable.
The presentation has also revealed that other income will flow in from annual licence fees which are N$1500 per km2.
The oil companies are also expected to contribute US$150,000 a year for training to the Petrofund.
According to Shiwana, so far 27 exploration wells have been drilled and in the period of two years Namibia has made oil discoveries at four wells.
The oil discovered in the southwest of the country are at Graff, Venus, La Rona, and Jonker wells.
One of the wells is being fast-tracked, multi-phased incremental and the second one is also being fast-tracked, with multi-tie back, phased incremental.
This comes as Namibia has quickly risen to become a highly attractive Exploration & Production market following four oil discoveries made in 2022 and 2023 by oil majors TotalEnergies (Venus) and Shell (Graff and Jonker-1X), off the coast of Namibia.
Ndeunyemaalso indicated that Total and Shell have commenced appraisal activities to fast-track development of the Graff-1, Jonker-1, and Venu-1 discoveries.
He said the Venus reserves development is being accelerated and appraisal is ongoing with the first oil expected in 2029
As for the Jonker reserve the appraisal is ongoing and the development concept is currently matured, the first oil is expected in 2030.
Out of the four Namibian oil discoveries, three are in the top 30 deepwater discoveries since 2015 with the Venus oil reserves discoveries being the 2nd largest, he said.
Once Namibia starts extracting oil it will be among the top 15 oil producers by 2035.
The new sector is estimated to double the country’s GDP per capita in less than a decade with the development of Graff and Venus expected to add nearly US$240bn to Namibia’s GDP between now and 2043.
This can be broken down into US$150bn direct value added, US$33bn indirect, and US$57bn induced.
According to Ndeunyema, the projects alone will generate over 3,600 jobs at peak, with the potential to maintain these levels with the correct management of skills gained.
The Graff and Venus developments will directly employ 4,200 people at peak, and an average of nearly 2,000 people a year across the 20-year project lifespan.
In terms of deepwater exploration, Namibia is expected to receive the highest exploration capital expenditure in Africa from Total Energies to the value of US$300m (N$5.5b) appraising Venus.
The capital expenditure is likely to increase due to the potential of additional discoveries, Ndeunyema said.
Beyond the estimated benefits, he highlighted that there is a need for a policy statement on the Namibian oil and gas sector, adding that Namibian needs to set a tone in terms of what it aims to achieve from the petroleum sector, from which all policy and initiatives will flow
Ndeunyema added that unpacking and understanding the value chain will be crucial as it will enable policymakers and private sector stakeholders to develop frameworks. Email: erastus@thevillager.com.na