With tensions escalating in the Middle East amid the ongoing war involving Israel, the United States of America and Iran, global oil markets have reacted sharply, with crude prices recently surpassing the US$100 per barrel mark.
These and other geopolitical upheavals have created extreme market volatility and have severely disrupted global trade. This raises fresh concerns for fuel importing nations like Namibia. Despite recent offshore oil discoveries, Namibia is years from production and depends on imported fuel.
Institutions like the Ministry of Industry, Mines and Energy and Namcor are crucial in safeguarding supply and stabilising prices.
This week, New Era’s Head of Business and Lifestyle, Edgar Brandt (EB) interrogated Dr Victoria Nepembe (VN), acting terminal manager at the National Oil Storage Facility (NOSF), to unpack how the country is navigating these global shocks while preparing for a future as a potential oil producer.
EB: Can you please provide a breakdown of NOSF’s capacity and the types of fuel it can handle?
VN: We have a storage capacity of 75 million litres currently at the facility. The biggest is diesel hosted, which is around 45 million litres, and then we have two tanks of ULP, 10 million litres each. And then we have Heavy Fuel Oil (HFO) of 5 million, we have Jet A1 5 million, and then we have the firefighting equipment and everything you are also going to be shown in the field today.
The NOSF discharges products that belong not only to Namcor but also to industry players. Everything that comes into the country only comes in through us, through the jetty. The old jetty has been fully decommissioned. It was there for 60 years, and it was dilapidated and had become a safety concern and a risk. Hence, we moved everything to the new jetty.
EB: There’s a war happening in Iran. I see oil prices are well over US$100 a barrel. What can Namibia do to keep domestic fuel prices low?
VN: That’s a challenging one, and I have to put on two hats to answer that question. What happens is that the ministry conducts the full price calculation and gazettes it monthly. However, there is the National Energy Fund (NEF), which manages a slate account. That is an account between the government and the oil companies. That slate account is managed to track oil prices. So, for as long as we are still importing oil, we are subject to oil shocks of any type as a result of any instability, as it is happening now in the Arab countries that are the major oil producers. However, it now depends on the buffer that NEF fund has. It protects the consumer. Yes, that’s how it questions the prices. But we should also not forget our own local components that make up the full price. The taxes, the Road Fund Administration and the MVA levy all contribute to the increase in the full price.
EB: How long will the stored fuel at NOSF last in the case of severe supply disruptions?
VN: For Namibia, right now, we have three months of strategic stock. Also, each fuel company is required to maintain 30 days of fuel reserves. When we buy fuel, we are also trying to maintain the fuel’s integrity. Once you buy the fuel and it is not used for three months, then you have to sell it off. Strategic stocks are not meant to cushion us from rising fuel prices. It is meant to cushion us from supply disruptions.
– ebrandt@nepc.com.na