• Business 7

Namibia should joining mining watchdog

• 5 Months Ago - 2024-06-05 00:00:00

NJ Ayuk - Namibia has four onshore and four offshore basins that are estimated to contain 11 billion barrels of oil (boe) and 2.2 trillion cubic feet (tcf) of natural gas. Several recent oil discoveries have made the country an attractive target for oil companies.
The Namibian government has pledged to support field development to achieve production by 2026. If the finds are commercially viable, they could more than double the country’s gross domestic product (GDP) by 2040.
In this ripe environment, it’s important to note that Namibia has several financial accountability measures already in place — an existing governance structure that is very transparent, working anti-corruption laws, and requirements for the publishing of any payments to the state.
Membership in the Extractive Industries Transparency Initiative (EITI) could put the final piece of Namibia’s transparency efforts in place and make the nation’s oil and gas industry a model of openness.

EITI principles
EITI believes that a country’s natural resources belong to its citizens and should benefit them by supporting economic growth, development and poverty reduction.
To that end, since 2003, the organisation has promoted the open and accountable management of oil, gas and mineral resources.
Financial transparency, EITI says, can enhance investment environments, which leads to more opportunity for people and governments.
More than 50 countries are EITI members, committed to “disclosing information along the extractive industry value chain — from how extraction rights are awarded, to how revenues make their way through government and how they benefit the public.”
The organisation believes that peace and prosperity rather than conflict and division are promoted when there is a wall of better governance around extractives.

Why it matters
There’s no question that Namibia is experiencing an oil and gas boom. There are several deals in the books and more exploration on the horizon.
For example, Galp Energia’s Mopane discovery in Petroleum Exploration Lease (PEL)-83 in the Orange Basin off Namibia’s coast may prove to be one of the planet’s biggest offshore discoveries.
The company finished drilling two exploratory wells this year, with both showing substantial light oil columns and high pressures. Galp estimates hydrocarbons contained within Mopane at 10 billion barrels of oil (Bboe) or more, excluding any future exploration of the complex.
Nearby, Namcor, the National Petroleum Corporation of Namibia, and Custos Energy — a Namibian independent oil and gas exploration company — each control a 10% working interest in the PEL-82’s Walvis Basin, where US oil giant Chevron has an 80% working interest. Exploratory drilling is slated to begin in the last quarter of this year.
Encouragingly, Custos has signed a cooperation agreement with the Walvis Bay Poverty Reduction Trust (WBPRT), which is focused on alleviating poverty in the community through corporate social responsibility funding.
In addition, Angola’s Azule Energy is acquiring a 42.5% stake in an exploration project by Namcor, South African exploration company Rhino Resources, and local company Korres Investments in Block 2914A of the Orange Basin.
With this deal, Azule, a bp-Eni joint venture, is investing beyond Angola for the first time.
For these and future Namibian projects, EITI membership can provide valuable safeguards against the corruption around extractives revenues that’s been seen in other countries, including on our own continent.

Value continues
EITI is a strong organisation whose members have seen a significant decrease in corruption after instituting its standards. It has given citizens the power to hold their governments accountable for how they use resource wealth.
But one thing about it does give me pause: Glencore Plc’s continued representation on EITI’s board is a sore spot.
In 2022, Glencore pleaded guilty to seven counts of bribery after investigations by the US, the UK and Brazil revealed that the company paid bribes to secure access to oil in six African countries.
Glencore paid US$1.5 billion in fines to the US and UK governments. I am proud the African Energy Chamber led the campaign against Glencore and its outrageous behaviour.
Instead of board positions, the multinational commodities and mining firm’s executives should be held personally accountable for its proven long-lasting and widespread corruption, as Enron’s were early in the 2000s. Imagine if this was a Namibian or African company. They would have been buried.
I agree with Eric Ini, who made it clear in Minnesota Reformer last year that it is wrong for governments to continue to do business with Glencore.
Glencore is not alone.
Gunvor corruption scandal in Congo involved allegations of bribery and corruption in the country’s oil sector. Gunvor, one of the world’s largest oil traders, was accused of paying bribes to Congolese officials to secure favorable oil deals. Gunvor denied the allegations but agreed to pay a fine of nearly US$95 million to settle the case.
Equinor, an international oil company headquartered in Norway and majority-owned by the government of Norway, after corruption investigations, agreed to pay a total of US$21 million to settle criminal and administrative charges for violating the anti-bribery and books-and-records provisions of the US Foreign Corrupt Practices Act (FCPA).
Despite this disappointing situations, membership in EITI continues to be beneficial and would serve the Namibian people.
It would open the door to enhanced accountabilities for all stakeholders working in the country, give civil society a stronger voice, and help ensure that Namibian oil discoveries translate into tangible improvement in citizens’ lives.

No time like the present
Namibia has so much to gain from its vast hydrocarbon resources.
There is lots of room for the growth of oil and gas within Namibia’s power generation mix since most of the country’s electricity is currently generated by hydropower.
And as shown by recent upticks in exploration and discovery, Namibia’s offshore oil fields have become a focus for significant investment, in no small part through the government’s efforts.
With such large amounts of revenue in view, the need for oversight and accountability will be greater than ever. EITI membership could be instrumental in providing both. - African Energy Chamber