Inside the oil storage facility…interrogating the necessity of a billion-dollar project

Home National Inside the oil storage facility…interrogating the necessity of a billion-dollar project
Inside the oil storage facility…interrogating the necessity of a billion-dollar project

Namibia’s national oil storage facility, one of government’s biggest investment projects, hogged the headlines for a massive escalation of the cost of construction. Last week, New Era embarked on an exclusive site visit to see firsthand what the completed and fully operational multi-billion-dollar facility offers the nation. 

The National Petroleum Corporation of Namibia (Namcor) was appointed by government to manage and operate the national oil storage facility (NOSF) in Walvis Bay. 

Government constructed the facility to increase Namibia’s security of supply of fuel and petroleum products from a concerning seven to 10 days to a more manageable 30 days or more. 

On this understanding and in the long-term interests of the nation, Cabinet approved the implementation of the NOSF and a feasibility study was commissioned. The construction of the facility commenced in January 2015 and was officially handed over to Namcor on 1 March 2021 by the mines and energy ministry. 


Project financing

Initially estimated to require a capital investment of less than N$3.7 billion, the NOSF was finally constructed at a total cost of N$6.5 billion, to replace the old oil tanker berth in Walvis Bay, which is over 50 years old and has outlived its design life. 

This massive escalation in capital investment has raised eyebrows for which numerous variations to the initial project scope and drastic deterioration of the exchange rate have been accused of being the main culprits. 




The NOSF was financed mainly by two loans from the Development Bank of Namibia and from the African Development Bank. For this, the country must pay back N$2.4 billion at N$30 million per month for 13 years to the African Development Bank while the N$1.5 billion loan is being repaid at N$25 million a month for eight years. Government further committed to interest payments of N$2.7 billion, which brings the total repayment of the two loans to N$7 billion. The repayment of the loans is financed by a fuel levy of 60 cents per litre on all petroleum products in the country. 


Necessary alterations

Necessary project variations became evident right from the beginning, as the NOSF feasibility study progressed and the shaping of Namport’s master plan took shape. It was at this stage already that government realised that to properly accommodate the Namport masterplan as well as the other industry requirements relating to fuel storage, the NOSF scope of work would need to be considerably expanded.

This meant the initial estimates would need to be amended to accommodate the expanded scope of work to include, not only the new tank farm and a new tie in the pipeline as initially planned, but also many necessary additions such as a new harbour access channel, new access roads, a new jetty, a new onshore control station, a new port navigation system for the access channel complete with leading lights and navigation beacons, but most notably new docking berths. These were designed and sufficient for 60 000DWT (dead weight tonnage) vessels, upgradeable to 105 000DWT vessels, which is a substantial increase from the smaller 30 000 DWT vessels accommodated at the old

Being able to accommodate bigger DWT vessels has increased Namibia’s economies of scale in purchasing petroleum products which ultimately ensures the domestic downstream industry lands fuel at a more cost effective rate in the country. The NOSF, with its new site and location, now also provides the local oil industry with more infrastructure flexibility and a greater potential for future growth.


State-of-the-art infrastructure

The old oil berth currently poses a serious fire and environmental hazard to the entire Port of Walvis Bay and any incident there would result in an acute shortage of fuel in the country, resulting in overly drastic price escalations. Unfortunately, an upgrade of the old oil tanker berth was not in accordance with the Namport’s approved port masterplan, which meant a new facility had to be built that would form part of phase 1 of the envisaged SADC gateway port. 

According to NOSF terminal manager Ellis Egumbo, the new facility is mostly fully operational, receiving oil vessels every month. Egumbo explained the facility, which was commissioned in December 2020 when the first vessel was received, distributes petroleum products nationally as well as to neighbouring Botswana and Zambia. However, Egumbo noted the old berth cannot be decommissioned until new pipelines to fully service the oil industry are completed. This, he said, is expected to be completed in the coming months. 

The NOSF is comprised of the 75 million litre fuel tank farm, a new 1.7km long pipeline with a tie-in pipe connection to the existing privately-owned pipeline facilities, belonging to Total, Puma, Engen and Vivo (Shell).

The new harbour access channel was dredged to a depth of 16.5 metres and is 180 metres wide and 6.1 km long, which will not only be used by oil tankers but all vessels entering Namport’s new SADC gateway port. The facility further entails a nine-metre wide road with provision to carry a 50-ton mobile crane and other vehicle traffic for maintenance and the new 1.5km reinforced concrete access jetty with an offloading platform housing new mechanised marine arms. These include eight loading arms, three road loading bays and the fully automated facility can load 14 rail cars using 11 loading arms. 

Egumbo explained the newly constructed jetty enables vessels to offload fuel products for the tank farm or load products for export. 

Taking New Era on a tour of the facility, the NOSF maintenance services manager Gerhard Myburgh explained that a 4.7km set of petroleum products and utility pipelines from the new jetty to the fuel tank farm as well as a new seawater fire-fighting system complete with its own premix foam capability also forms part 

of the NOSF’s unique firefighting capacity.

Myburgh further noted there are four dedicated pipelines for diesel, ULP, JET and HFO (Heavy Fuel Oil used mostly by mines) which covers a total distance of 6.3km from the jetty to the terminal tank farm. Both the jetty and the terminal have state-of-the-art control rooms with the latest technology for monitoring and controlling fuel product movement. The terminal and the jetty also boast high-tech firefighting systems, including a six million litre water tank and independent foam generators. The terminal also houses tanks of nitrogen, which is used to thoroughly clean all fuel lines after each use. 

The NOSF operations also include loading and offloading of trucks and rail tankers, intertank transfers as well as transfers to and from private oil companies. 


Safety first

Safety is the top priority at the NOSF. Upon entering the massive 75 million-litre facility, all visitors must be clothed in flame and acid resistant safety gear, including safety boots and a helmet. Visitors are then put through a mandatory safety induction, which must be done annually with staff, which outlines precautions to be taken on site to optimise the safety of the facility and its staff. The staff is comprised of 48 employees who are fully Namibians. The relatively young team, sourced mainly from the Namibia University of Science and Technology, University of Namibia and vocational training institutes, is comprised of 36% females. 

This stringent attention to precautions has led to an impeccable safety record at the NOSF of more than 467 days of zero incidents.