By: Heartha Ekandjo
National petroleum cooperation of Namibia (Namcor) managing director Immanuel Mulunga says PDM leader McHenry Venaani’s request to renegotiate oil deals doesn’t make sense and that politicians lack understanding regarding the fuel industry.
“That letter, in my opinion, is misplaced and lacks an understanding of how the oil industry works. It will be better if politicians educate themselves on how the oil industry works before making such reckless comments,” Mulunga told The Villager.
His words come after Venaani, this week, in a letter, requested mines and energy minister Tom Alweendo to renegotiate the oil agreement.
Mulunga said they have tried on several occasions to explain to the public and politicians that the country wouldn’t just benefit from Namcor’s 10 per cent equity, but the 10 per cent was for Namcor and not for the country.
He added that the State gets revenues from three sources in oil production, being royalties, which are calculated from oil production of oil, taxes, and from Namcor’s equity.
“Government enjoys revenue from different sources, and major calculations are if you add those three components up, it will be more or less 65 per cent of the total revenues from the oil sales. So it’s not correct that it is only 10 per cent. You can’t just look at equity alone because that’s not the only way the government benefits,” Mulunga argued.
Furthermore, he said that it was disturbing for those in the industry to read “such misguided understandings of how the oil industry works.”
Venaani, in a letter dated 23 August, requested that Alweendo renegotiate the oil agreements.
Venaani asked that the negotiations be done in good faith and from a point of departure that respects the principle that the oil reserves and proceeds should benefit Namibia’s current and future generations.
The official opposition leader argued the government only profiting 10 per cent from the new oil discovery at an exploration block offshore Namibia located in block 2913B was worrisome and unacceptable.
“The government’s control over the natural resources is in a fiduciary capacity, and the aforementioned constitutional provisions can be interpreted. This means that the State is obliged to use that control to advance popular welfare – owed to the social contract between the State and its citizenry,” he said.
The PDM leader mentioned that it was a great concern to note that TotalEnergies was the operator with a 40 per cent working interest, alongside Qatar Energy (30 per cent) and Impact Oil and Gas (20 per cent), leaving the government with a meagre 10 per cent stake.
“This is one documented example of the government having negotiated in ill-faith. Wrongly structured oil exploration agreements have far-reaching consequences,” Venaani said.
Furthermore, he said those unethical practices had grown even larger to the extent that they threatened to hamper development and growth domestically and continentally.
He added that it went without saying that corruption was rife in Namibia and if they concluded agreements that were not favourable to the country’s developmental objectives, Namibia’s oil resources would not benefit its people.
“It is against the backdrop above and in line with national interest that I write to request that all existing and new oil exploration and extraction agreements concluded by the mines and energy minister be made available to the office of the official opposition,” the letter read.
In February 2022, TotalEnergies made a significant discovery of light oil with associated gas on the Venus prospect, located in block 2913B in the Orange Basin, offshore southern Namibia.
The Venus 1-X well encountered approximately 84 meters of net oil pay in a good quality Lower Cretaceous reservoir.
At that time, Kevin McLachlan, Senior Vice President of Exploration at TotalEnergies, said this offshore discovery in Namibia and the very promising initial results prove the potential of this play in the Orange Basin, on which TotalEnergies owns an important position both in Namibia and South Africa.
Block 2913B covers approximately 8 215 km² in deep offshore Namibia. TotalEnergies is the operator with a 40 per cent working interest, alongside QatarEnergy at 30 per cent, Impact Oil and Gas at 20 per cent and Namcor, 10 per cent.
Namcor is a 100 per cent Namibian State-owned oil company owned by the State and with a mandate to operate in both the advancing and extracting sectors of the oil industry.
