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Home / Tide turns for Kudu Gas…developers aim to switch on power in 2026 

Tide turns for Kudu Gas…developers aim to switch on power in 2026 

2022-05-27  Edgar Brandt

Tide turns for Kudu Gas…developers aim to switch on power in 2026 

The continuing conflict between Russia and Ukraine has once again exposed the vulnerability of reliance on outside entities for national energy supplies. This has sent European states scrambling to end their reliance on Russian fossil fuels as fast as possible with the European Commission saying it needs over N$3 trillion over the next five years to pay to phase out Russian fossil fuels and speed up a switch to green energy.

In a similar strategy, BW Kudu, a wholly-owned subsidiary of BW Energy and the National Petroleum Corporation of Namibia (Namcor), earlier this week told New Era that “Kudu Gas will be landed in Namibia.” One of the main reasons for this move is the fact that Namibia still imports, on average, more than 60% of its domestic electricity needs.

“Developing the Kudu Gas field, constructing a 190km pipeline and building the power station will cost, as an order of magnitude, some N$20 billion,” stated Klaus Endresen, General Manager of BW Kudu. He added that Kudu represents a massive foreign investment for Namibia and stated that BW Energy has already acquired the production facility for the Kudu Gas field.

“We have completed the key pre-feasibility technical and developmental studies, which are all supportive for the project. We are currently active in the local and regional electricity markets seeking some long-term offtake arrangements. We expect to start the comprehensive FEED (Front End Engineering and Development) studies within a few months. After a positive conclusion, we will be ready to implement,” Endresen told New Era. 

He added that the aim is to be able to switch on the power in 2026, thereby making Namibia electricity secure and self-sufficient in power generation.

Responding to questions from this publication, Endresen admitted that the Kudu Gas to Power project is not directly affected by the changing international gas situation exacerbated by the Russian conflict in Ukraine but explained that indirectly, there are some implications. 

Endresen pointed to July 2021, when there was very little water in the Kunene River and the hydroelectric plant was virtually at a standstill, 84% of Namibia’s electricity was imported. 

These imports come from three countries that are all load shedding at home, namely South Africa, Zambia and Zimbabwe. This, Endresen stated, is a precarious situation for Namibia as these three countries cannot supply enough electricity to their own domestic markets. 

“Hence, the local understanding has grown that Namibia is in a vulnerable situation and that it makes sense to develop Namibia’s own Kudu Gas resources to ensure electricity security and self-sufficiency for the nation,” Endresen stated. 

He continued that significant volatility in recent international gas prices has also demonstrated that importing liquefied natural gas (LNG), rather than using Kudu gas would expose Namibia to supply risks and high import prices. 

“Kudu gas will be produced at agreed long-term price mechanisms shielding the Namibian market from external price and supply shocks. The gas price is in any case very competitive with imported gas prices,” Endresen explained. 

He continued: “As the market for Kudu-based electricity will include off-takers in neighbouring countries, the project will actually be a helping hand to those countries as they do have deficits in their electricity supplies. Furthermore, most of the electricity in the region is based on coal. Hence gas-based electricity from Kudu, with CO2 emissions less than 50% of coal-based electricity, will also support those countries’ transition to a more environmentally friendly energy sector. Internationally, gas plays a key role in this transition.”

Asked about funding options for developing Kudu, Endresen said financing for investments in new oil and gas exploration projects is not as straight forward as it was in the past. However, he noted that financing for the development of proven gas fields, such as Kudu, “is quite doable. We do not see any major problems in that sense”.

The Kudu gas deposit is approximately 130km off the southwest coast of the country. The field was discovered in 1974 with Kudu-1 and is delineated by seven subsequent wells.

During a recent interview, Namcor’s managing director Immanuel Mulunga said Kudu Gas “represents an opportunity to reduce carbon emissions and strengthen energy independence for Namibia, which currently imports a major part of its electricity from coal-fired power plants outside of the country.”

 


2022-05-27  Edgar Brandt

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