NAMIBIA’S recent oil discoveries have the potential of transforming the nation’s economy and bring unprecedented opportunities for growth and development.
As excitement builds around the prospects of tapping into these newfound resources, it is crucial for Namibia and Namibians to carefully position themselves to maximise the benefits while avoiding the pitfalls associated with the infamous resource curse.
The discovery of oil off the coast of Namibia has sparked optimism among policymakers, investors and citizens alike. With the potential to significantly boost government revenues, create jobs, and stimulate economic growth, the oil discoveries represent a unique opportunity for Namibia to diversify its economy and reduce its dependency on traditional sectors such as diamond mining and agriculture.
Namibia has become a global exploration hotspot after offshore discoveries by oil majors, and it wants to accelerate the milestone of its first output.
This week, Portuguese oil company Galp Energia said it conducted testing operations at the Mopane-1X well in January and the Mopane-2X well in March. In both wells, which are eight kilometres apart, Galp said “significant light oil columns were discovered in high-quality reservoir sands.”
The Mopane field is located in the Orange Basin, along the coast of Namibia, where Shell and France’s TotalEnergies made several oil discoveries of an estimated 11 billion barrels of crude oil in 2022.
Galp said flows achieved during the tests reached the maximum allowed limit of 14 000 barrels per day, potentially positioning Mopane as an important commercial discovery.
Some people have touted it as potentially the world’s biggest-ever deep-water find. Namibians could benefit by preparing to provide other services to the oil and gas sector. While oil may only flow in 2030, a lot of legal, environmental, and building infrastructure must be done.
Oil accounts for a large percentage of the world’s energy consumption, and when the oil finally flows, the entire industry, including upstream, midstream, and downstream activities, must be occupied, sustainably managed, and regulated by Namibians for the benefit of Namibia.
When mines minister Tom Alweendo this week encouraged entrepreneurs who want to play in that sector to not develop a sense of entitlement, he reiterated that no one is going to hand you projects and jobs just because you are a Namibian.
Namibians on social media will obviously critique this stance, but while some sit around to complain, others are researching possible opportunities that may accrue from the industry.
While Namibians might not yet have the skills and resources to fully participate in the exploration process, there are thousands of different kinds of products that can be made from oil, and the extraction industry has several layers where workers and entrepreneurs could enter the stage, including future exploration, extraction, refining, transportation (often by oil tankers and pipelines), and marketing of petroleum products.
If we do not want our raw materials to leave our shores unprocessed, we, Namibians, must insist on being involved in the beneficiation process.
Petroleum is the raw material for many chemical products, including asphalt, lubricants, ink, cosmetics, waxes, pharmaceuticals, solvents, fertilisers, pesticides, synthetic fragrances, and plastics.
Namibia’s draft National Upstream Local Content policy aims to increase local participation across the petroleum sector’s value chain, from technology transfers to helping train skilled workers and enhancing job creation in a country where unemployment and poverty are high, according to the World Bank.
Namibia expects to finalise its policy on local participation in the oil and gas sector by year-end, the energy minister said this week, as the country looks to industrialise and share economic benefits with its people.
To reap maximum results from the oil discoveries, Namibia must adopt a strategic and holistic approach that prioritises sustainable development, transparency, and good governance.
One key step that Namibia can take is establishing a comprehensive legal and regulatory framework that governs the extraction and management of the country’s oil resources. This framework should include clear guidelines on revenue management, environmental protection, local content requirements, and the rights of indigenous communities.
Namibians must now prioritise capacity building and skills development to ensure we are equipped to take advantage of job and business opportunities created by the oil industry.
Investing in education and training programmes that focus on relevant skills such as engineering, geology, and environmental management will not only benefit individuals but also contribute to the long-term sustainability of the oil sector.
In addition to maximising the economic benefits of the oil discoveries, Namibia must also guard against the potential pitfalls of the resource curse. History has shown that many resource-rich countries have struggled to translate their natural wealth into sustainable development, often falling victim to corruption, conflict, and economic instability.
To avoid the oil curse, Namibia must prioritise transparency and accountability in the management of its oil resources. This includes ensuring that contracts with oil companies are negotiated fairly and openly, that revenues are effectively tracked and managed, and that there is robust oversight of the industry by independent regulatory bodies and civil society organisations.
Ultimately, Namibia’s success with its oil discoveries will depend on its ability to strike a delicate balance between maximising economic benefits and safeguarding against the risks of the resource curse. By adopting a forward-thinking and inclusive approach that prioritises sustainable development, transparency, and good governance, Namibia can pave the way for a prosperous future fuelled by its newfound oil wealth.