How would you evaluate the success of Namibia’s integrated hydrocarbon strategy to date?
In just over a year, Namibia has seen five major oil discoveries adding to the already one gas discovery made in the Orange Basin by global energy majors Shell and TotalEnergies in partnership with Qatar Energies, Impact Oil, Namcor and BW Kudu respectively. These finds – namely, Graff-1, Jonker-1X, La Rona-1 and Lesedi-1X in PEL 39 and Venus-1 in PEL 56 – have transformed the country into one of the most attractive hydrocarbon plays in the world. At the same time, a strong pipeline of renewable energy, green hydrogen, mining and power generation projects have kicked off under efforts by the Ministry of Mines and Energy to advance access to sustainable energy while capitalizing on rising demand for critical minerals. In this scenario, Namibia is left not with the challenge of diversifying its energy mix, but with integrating these resources in an environmentally and mutually-beneficial manner.
Namibia’s desire to monetize offshore oil and gas resources, as well as its commitment to achieving net-zero emissions, can best be achieved through a policy framework that balances both objectives. The Ministry of Mines and Energy is therefore driving an integrated hydrocarbon strategy, incorporating both ambitions to achieve first oil with efforts to transition to a cleaner energy future.
Since the 2022 discoveries, the country has seen growing success under this strategy. A fresh slate of investment continues to flow into Namibia’s upstream market as new E&P players enter, hoping to mirror the exploratory success of their predecessors. Currently, TotalEnergies is engaged in a multiwell appraisal and drilling campaign in Block 2913B of PEL 56 in the Orange Basin. Majors like Chevron, ExxonMobil, Galp are either entering or expanding their footprint across the market. Onshore, ReconAfrica is conducting seismic research in the PEL 73 license area in the Kavango Basin, recently announcing an updated prospective resource estimate of 22.4 trillion cubic feet of natural gas.
The country’s gas-to-power agenda is also gaining momentum, with the Kudu gas development project on track to supply baseload power to both the domestic and regional market. With the advent of new associated gas supplies, the 420 MW power plant that the project entails means that Kudu will likely play a much larger role in electrifying the nation than first envisioned.
Meanwhile, several green hydrogen projects are underway including the 3 GW Tsau Khaeb project developed by Hyphen Hydrogen Energy, with a production capacity of 300,000 tons per annum, as well as the 2.5 GW Tumoneni project; the 42 MW Daures Green Hydrogen Village project and the 50 MW hybrid green hydrogen project in Swakopmund. Three hydrogen valleys are also being assessed in Kharas, Walvis Bay port and Kunene.
By driving an integrated hydrocarbon agenda, the Namibian government is not only setting the standard for a diversified energy mix in Africa, but also sending a strong signal of confidence to global investors in the stability and longevity of their investments.
As a nascent hydrocarbons market, Namibia has the opportunity to learn from other oil-producing African nations. What lessons can the country learn, in terms of ensuring oil and gas development contributes to energy diversification and socioeconomic development?
Namibia is uniquely positioned to meet both regional demand for oil and gas, as well as global demand for green hydrogen, synthetic fuels and critical minerals. Being a new player to the hydrocarbon market has its advantages: not only can we learn from those that went before us, but we can also tap into regional expertise and technology to develop successful projects that prioritize socioeconomic growth and value addition. Regional oil heavyweights like Angola have already partnered with Namibia, with several bilateral agreements in place to drive cooperation across local content, capacity and skills development, regulatory planning and hydrocarbon development. From policy structuring to capacity building initiatives to resource integration, Namibia is already gaining crucial insights from its oil-producing neighbors.
What are your top energy development priorities between now and 2030?
Underpinned by our integrated hydrocarbon strategy, our main priorities between now and 2030 lie in the balance between achieving first oil and getting large-scale green hydrogen projects off the ground. Across the sector, we are working towards bringing new investment into the country, particularly in the areas of infrastructure, power generation, industry and manufacturing. In tandem, unlocking the potential of Namibia’s offshore and onshore basins will be contingent on driving and incentivizing sustained investment in the upstream. These goals require a complete overhaul of the existing regulatory framework to ensure competitive, attractive terms for investors, as well as coordination with international partners.
At the cusp of the sector’s transformation lies policy. Currently, oil and gas legislative frameworks are set out in the Petroleum Exploration and Production Act of 1991 (as amended in 1998), the Model Petroleum Agreement and the Petroleum Products and Energy Act, (1990) (as amended in 1994) and its complimenting regulations passed in 2000. However, since the latter amendments, little revision has been made to both these pieces of legislation. The country’s recent exploratory success has underscored the need for not only a revision of the governing policies, but also their adaptation to the changing economic and social climate we find ourselves in today.
This leads us to our next priority: unlocking Namibia’s potential as a regional green energy hub. The country has been identified as a globally-leading green hydrogen market owing to its considerable, co-located renewable energy resources. In partnership with leading companies, the country is making progress with the development of the country’s largest green hydrogen project: a $10-billion facility equipped with a 3 GW electrolyzer fed by 7 GW of wind and solar energy. The government recently approved the Feasibility and Implementation Agreement, and our priority will be providing the support needed to see this development, as well as others in this field, to fruition.
Local content also remains of utmost importance as we enter this next phase of development. Namibia’s diverse energy resources can and should serve as catalysts for long-term and sustainable economic growth. However, this can only be achieved if the population has access to the opportunities that the evolving industry has to offer. Namibia’s energy sector is largely in its infancy, and this represents a strategic advantage as the market grows, local Namibians can contribute to building the industry from the ground up, thereby taking shared ownership in this development. As such, the Ministry of Mines and Energy has placed local content at the heart of our oil and gas development agenda and is busy investing in capacity building initiatives, skills and technology transfer, thereby ensuring that new energy development translates into tangible opportunities for Namibians.
Energy Capital & Power is a strategic partner of the Namibia International Energy Conference (NIEC) – taking place in Windhoek on April 23-25, 2024. The 6th annual conference unites industry leaders, business executives and policymakers to engage in dialogue, exchange ideas, create new partnerships and identify strategies to foster a prosperous energy industry in Namibia and beyond. For more information, please visit www.NIEConference.com.
Distributed by APO Group on behalf of Energy Capital & Power.
