WINDHOEK – The Kudu Gas to Power project, which has in the past been hailed as the answer to Namibia’s electricity woes, has seen a revival by BW Kudu Limited, who says recent technological advancements as well as a consistent market for reliable economic energy makes the electricity project viable. BW Kudu Ltd, a subsidiary of BW Offshore, which is listed on the Oslo Stock Exchange and is a global provider of floating production services to the oil and gas industry, became the operator for the Kudu Gas field in 2017 through 56 percent shareholding while the National Petroleum Corporation (NAMCOR) holds the remaining 44 percent.
BW Kudu’s Namibia Country Manager, Klaus Endresen, is fairly confident that the necessary local and international investors can be secured to mobilise the approximately US$2 billion needed to bring the 475 MW project to fruition.
During an exclusive interview with New Era, Endresen noted that once all the necessary elements are in place, it will take about three years to see the Kudu Gas to Power project providing stable and reliable electricity to the Namibian market. However, he noted that it will take another year for all the additional elements to be in place.
“The project will not burden the tax payer because it will be financed through private investments. The project sponsors will only need assurance from Government that the electricity bought by public institutions will be paid for” said Endresen while confident that Government will provide the political support for the project.
Meanwhile, the General Manager for BW Kudu, Claudio Meggiolaro, stressed that the single buyer model for Kudu Gas to Power, which would have seen all the electricity produced sold to NamPower, is being modified to a multi-buyer model. This modification will be refined to include a private energy supply concept that would most likely see Kudu Gas also supply electricity directly to private buyers.
Meggiolaro pointed out that the project has become more attractive for institutional investors as the upstream capital expenditure has already been reduced by about 40 percent to below US$1 billion. This, Meggiolaro explained, was done by BW Offshore agreeing to reuse one of their floating production storage and offloading (FPSO) vessels.
The certified resource base in the Kudu gas field is about 420 Mboe (million barrels of oil equivalent). This is about the same size as what South African President, Cyril Ramaphosa described as a ‘game changing’ discovery by Total off the south coast of South Africa earlier this year.
BW Kudu explained that the Kudu Gas development plan is based on two wells together producing 250 Mboe over 25 years, the redeployment of an FPSO provided by BW Offshore, and a gas export pipeline from the FPSO to shore where a 475 MW power plant would be constructed to serve the domestic and regional market.
“The full development of a local and clean resource like Kudu natural gas would provide significant environmental, social and financial benefit to the Namibian country and its citizens,” Endresen stated. “Kudu can provide the required base load and will fit neatly in the local electricity mix complemented by Solar PV and wind power.”
He pointed out that Namibia imports on average 60 percent of the electricity it consumes. This electricity which is mainly imported from South Africa’s Eskom, with the balance imported from Zambia and Zimbabwe, imposes an annual import bill of about N$3 billion on the Namibian economy.
“With the implementation of Kudu Gas project, Namibia would become self-sufficient for several years, after the current agreement with Eskom will expire in 2022,” said Endresen.
He continued that the electricity produced by Kudu Gas would not be more expensive than the current weighted import prices.
“Kudu electricity will instead be cheaper than South African domestic prices, as the recent increases of power tariffs requested by Eskom were approved by the regulator. The Kudu gas project would deliver power at pre-agreed prices linked to inflation (CPI), providing stability to Namibian economy and cost predictability often required by industrial players interested in establishing or expanding their investments in Namibia,” said Endresen.
He continued that if the 475 MW power station were to be developed, the Kudu Gas project would have a dramatic and positive effect on the national balance of payments, increasing to about N$18 billion after 25 years. The project is also expected to increase the domestic Gross Domestic Product (GDP) by almost two percent and contribute corporate tax, income tax, royalties, levies and license fees to the Government.
Endresen concluded that the construction of the Kudu Gas power plant would directly employ more than 1200 people, and during operation the power plant will directly employ 60 to 70 people with the same amount of people employed offshore. He added that the project also has the potential to develop a substantial support industry seeing as Kudu would be the first extractive hydrocarbon initiative ever in Namibia.
Caption: A floating production storage and offloading (FPSO) vessel belonging to BW Offshore, a pioneering company in the floating oil and gas industry. One of the ways in which BW Kudu has managed to reduce the upstream capital expenditure for Kudu Gas project by about 40 percent is to reuse an FPSO vessel from BW Offshore. Photo: Contributed
2019-03-19 09:55:51 6 months ago