OIL & GAS

The recent discovery of oil prospects off Namibia’s coast is a potential game changer for the country. It is anticipated that the industry will attract billions of dollars’ worth of investments and expand the economy’s current size by a sheer factor. At the moment, however, Namibia’s oil and gas industry is still in its infancy and exploration stage. Thus, the country meets its entire demand for petroleum products through imports.

 

There are currently four frontier offshore basins of particular interest to petroleum explorers: Namibe, Walvis, Lüderitz and Orange. Furthermore, there has been exploration activities in the onshore basins namely Okavango, Owambo-Etosha and Nama basins since the late 1920’s. If proven commercially viable, the country’s GDP could double by 2040. In addition to these explorations for oil, the National Petroleum Corporation of Namibia, NAMCOR, in partnership with the Norwegian company, BW Energy, is looking to develop the Kudu Gas Fields, discovered in 1974 in the northern Orange sub-basin, approximately 130 km off the south-west coast of Namibia. The Kudu Gas reserves have the potential to transform Namibia into a net electricity exporter through gas-to-power production. A combination of oil and gas discoveries means Namibia is poised to become a significant player in the oil and gas industry.

 

Drawing lessons from the experiences of oil producing countries on the continent and across the world, the Namibian Government is cognisant of the potential pitfalls that are associated with discoveries of valuable natural resources such as the classical Dutch disease phenomenon and the ever-present threat of corruption and illicit financial flows. Therefore, in his Budget Motivation Statement delivered on 8 April 2024, the Minister of Mines and Energy, Hon. Tom Alweendo, reiterated the Government's vision to effectively manage this new sector and to ensure that the subsequent economic benefits will accrue fairly and equitably to all Namibians. One of the notable efforts in that regard is the development of the Local Content Policy (LCP) in the oil and gas sector. This policy aims to ensure maximum local economic benefits through supply and service provision to the oil industry by businesses owned or controlled by Namibians, skills and enterprise development and as a result increased local participation in the sector.