Popular Democratic Movement (PDM) president McHenry Venaani recently asserted that national oil agreements must be renegotiated in good faith and from a point of departure that respects the principle of oil reserves and proceeds benefitting Namibia’s current and future generations.
Venaani made these statements in an open letter directed to mines and energy minister Tom Alweendo last week.
“It is as such of grave concern to note that an exploration block, offshore Namibia, located in block 2913B wherein the TotalEnergies’ Venus-1X well is located, TotalEnergies is the operator with a 40% working interest, alongside QatarEnergy (30%), Impact Oil and Gas (20%), leaving the government with a meagre 10% stake,” Venaani lamented.
The PDM leader labelled that such negotiations are an example of the government having negotiated in ill faith.
Venaani further emphasised that wrongly structured oil exploration agreements have far-reaching consequences, adding that such unethical practices have grown even larger to the extent they threaten to hamper development and growth domestically and continentally.
“It goes without saying that corruption is rife in Namibia and if we conclude agreements that are not favourable to the developmental objectives of the country, our oil resources will not benefit the Namibians,” a concerned Venaani stated.
He also requested that all existing and new oil exploration and extraction agreements concluded by the mines and energy ministry be availed to the office of the official opposition.
Earlier this year, Namibia confirmed oil and associated gas discovery on the Venus-1X prospect operated by TotalEnergies, located in block 2913B (PEL 56) in the Orange Basin, offshore southern Namibia.
This discovery confirmation followed Shell’s Graff-1 discovery in the same vicinity.
During an International Energy Conference held in Windhoek in April this year, minister of mines from Equatorial Guinea Gabriel Mbaga Obiang Lima said Namibia should not be apologetic for having discovered oil, but the country should ensure it derives maximum benefit from it.
He shared crucial advice during the conference with Namibia on its oil discoveries: “This is a blessing, and Namibia should utilise and benefit from it. I mention this because, sometimes, they make you feel you are making something wrong. Don’t sit here and wait for people to come; go there”.
He advised Namibians to visit other African countries where oil was already discovered, produced and developed to ensure the country benefits from the valuable commodity.
At the same occasion, Alweendo stressed the oil discoveries in Namibia will be a blessing for future generations and not a curse as is the case with experiences with other countries.
According to Alweendo, countries are cursed if their economies tend to rely only on that specific sector as a revenue stream.
As such, Alweendo believes Namibia has strong institutions to ensure the country’s population benefits from the abundant natural resources.
“The discovery will be a meaningful factor to the domestic economy. Namibia has engaged well with investors to make sure this is a win-win situation once production commences,” he said.
Once the commercial viability of Namibia’s first-ever oil discoveries has been verified, 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 associated sectors that could provide much-needed jobs.
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 consultancy explained that 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 that 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.