Mines minister Tom Alweendo has said the two companies that made noteworthy oil discoveries off Namibia’s coast, Shell and TotalEnergies, are in a rush to reach production stage.
He noted this last week during the ministry’s stakeholder engagement. Alweendo added: “During our meetings with the two companies, it became clear that the two are in a fast pace to get to production in four years, also to take advantage of energy transition the country foresee.”
From research, many countries take about eight years on average from discovery to production stage.
These hydrocarbon detections have the potential to benefit the country’s economy with billions of dollars in revenue. In addition, a bourgeoning local oil industry holds the potential to create unique business opportunities for the country’s economic development through the establishment of a new sector that could provide much-needed jobs.
Earlier this year, a report by global consultancy Wood Mackenzie, noted the two oil discoveries offshore Namibia are likely to bring in as much as N$53 billion in revenues for the State. The consultants explained if both oil projects proceed at the same time, then at peak production, it could generate more than US$3.5 billion (approximately N$53.5 billion) annually in royalties and taxes for the government.
Wood Mackenzie further estimates the two projects could attract a cumulative investment of US$29 billion (some N$443 billion) in investment, which is about three times the size of Namibia’s GDP in 2020.
Avoiding the resource curse
When asked about the danger of the discoveries turning out to be a curse, Alweendo said: “ the presence of oil in Namibia can be beneficial, and does not automatically need to lead to the dreaded oil curse.”
However, the mines and energy minister warned that if the extractive industry is poorly managed, the influx of oil revenues can distort Namibia’s economic fundamentals, can create corruption, and can create conditions that trigger conflict.
The resource curse usually refers to the failure of resource-rich countries to benefit fully from their natural resource wealth, and for governments in these countries to respond effectively to public welfare needs.
“An oil curse will depend on what we decide to do. It can be a curse in two ways, namely economically and socio-politically. On the economic side, it can be a curse if we neglect all the other sectors of the economy because of too much revenue we will get. If one day oil becomes depleted, the economy cannot function without this one sector. We know very well that oil prices are so volatile,” he cautioned.
At the same occasion, chairperson of the Parliamentary Standing Committee on Natural Resources, Tjekero Tweya pointed to examples of resource curses from countries like Nigeria, Angola and Mozambique.
“There was peace before discoveries. We do not want ours to be a curse unless we do not plan well. It can only be a curse in Namibia if we do not include the locals so that they can also directly benefit,” noted Tweya.