WINDHOEK – Following an announcement last week that government has shelved the Kudu Gas Power Plant project to consider cheaper sources such as renewable energy, the operator of the Kudu license BW Kudu has come out in defence of the development, saying the project “is alive and well”. The Namibia Press Agency (NAMPA) last week reported that Minister of Mines and Energy Tom Alweendo said Kudu Gas was on the planning horizon for a long time but it did not happen due to the scope of investment required.
Alweendo’s statement came after the national power utility NamPower decided not to include Kudu gas-to-power in their recently announced five-year strategic plan. Instead, the utility will focus on solar, wind and biomass power to be generated in the country, while continuing to import electricity from South Africa and the region. However, current operator of the massive gas resource country manager of BW Kudu Limited Dr Klaus Endresen was adamant: “We believe in the Kudu field, and we have the required resources to develop it. We see the project and our role as the embodiment of the type of investments that H.E President Geingob called for at the International investment conference in July this year”.
In a statement released yesterday, Endresen noted that significant work and resources have been and will continue to be spent on examining how to best develop the Kudu gas field to benefit Namibia.
“This work and the license fees that we pay to the Government of Namibia amount to almost N$100 million next year. A similar amount was spent last year,” read Endresen’s statement, adding that the original Kudu gas project is undergoing change to adapt to the new plans.
Endresen explained that since earlier this year, BW Kudu, which partnered with the National Petroleum Corporation of Namibia (Namcor) to develop the project, have been examining various alternatives for the use of the Kudu gas. This, he stated, includes, among others, export opportunities, and supplying gas for the Namibian and regional transport, mining and shipping sectors, and so on.
But he emphasised that gas-to-power is still not off the agenda, should the Namibian power supply and demand requirements be different than currently anticipated.
Said Endresen: “Gas is globally replacing coal and oil, as it has much lower CO2 emissions and is thus a much more environmentally friendly source of energy. South Africa is planning to eliminate a lot of coal fired power generation capacity, and is looking at a mix of gas and storage technology for their revamped baseload and peaking power production over the coming years, as solar and wind energy will only be intermittently available”.
Since January 2017, BW Kudu has been the operator and 56 percent shareholder of the Kudu Gas licence, with partner NAMCOR holding 44 percent. BW Kudu is a subsidiary of BW Offshore Ltd, which is listed on the Oslo Stock Exchange in Norway. According to Endresen’s statement, when BW Kudu entered the project, it was a gas-to-power project of 800 MW capacity. Later in 2017, Namibia decided to reduce the size of the planned power plant to 475 MW. In the third quarter, 2018, the consortium of BW Kudu, Namcor and NamPower confirmed to government that the US$2 billion Kudu gas-to-power project would be commercially and technically viable, producing electricity at a price level competitive with South Africa imports.
“The project would have been financed by equity and loans. For this type of large infrastructure projects, investors and international lending institutions require guarantees from the host state. There was no direct financial contribution asked from government or the Namibian taxpayer – only government guarantees. Government declined in November 2018 to give such guarantees,” Endresen stated.
He continued that as the operator, BW Kudu and its partner NAMCOR are now in the process of examining various alternatives for the use Kudu gas. “The Kudu gas field is a significant natural resource containing 0.75-1.3 trillion cubic feet (TCF) of gas. The energy content of 0.75 TCF, as an example, corresponds to 133 million barrels of oil equivalent. In terms of heat value, this is the equivalent of Namibian consumption of petrol for 50 years, or the national consumption of electrical energy for 50 years,” Endresen explained.
The Kudu license held by BW Kudu and Namcor is valid until 2036, and Endresen expects to announce new plans for Kudu gas in due course.