!Gawaxab defends Namibia’s oil shareholding structure
Bank of Namibia governor Johannes !Gawaxab says only when the value of the oil wells being pursued is realised can government be certain if its decision to limit its shareholding in current oil projects will be fruitful.!Gawaxab made the comments during a stakeholder engagement in Lüderitz as the town gears up to become Namibia’s future oil and gas mecca.
Namibia has limited its capital participation in the oil and gas industry by only taking up free-carried interest in various oil wells, notably those majority-owned by oil majors TotalEnergies and Shell, who both have announced major oil discoveries in the Orange Basin in southern Namibia.
It follows a departure from countries such as Angola and Nigeria, which took on the responsibility for exploration and development out of their own budgets.
“If you can find the money, you can do that; you can go the Namibia route and own 10% and be carried. We have opted as a country for the carried-interest regime,” !Gawaxab said during the stakeholder engagement.
“If we believe we could put in [capital], it costs about US$120 million just to drill one well; if you think you can find that money, take that risk,” he added.
Opportunities
Multiple wells were drilled in the past that did not yield positive results, the central banker noted.
“How many wells did we have that were drilled in the past? That’s the route we have taken and I know we did not have the money,” !Gawaxab said.
Despite Namibia’s low shareholding in its oil fields, revenues flowing could double the economy, he said.
"Potentially, it could double our economy,” !Gawaxab said.
Another opportunity was the capital spend that would enter Namibia once oil starts flowing to construct the oil and gas infrastructure within Namibia, he said.
“The oil and gas capital expenditure, is said to be about US$10 billion; that’s about N$180 billion, this thing alone will be N$180 billion. There are enormous opportunities that are coming to Lüderitz,” !Gawaxab said.
Confidence
Shell, TotalEnergies and Portugal’s Galp have made a series of oil discoveries in the past two years. Together, these could produce hundreds of millions, if not billions, of barrels of oil, Financial Times columnist Alan Livsey wrote recently.
"If anything, a surprisingly high success rate could spur more activity. Of the 17 pure exploration wells since February 2022, there have been 15 confirmed discoveries of commercial quantities of oil or gas.
"Certainly, Chevron has confidence in this outcome. In October 2022, America’s second-largest oil company announced that it had acquired 80% of an offshore licence from the Namibian affiliate of Toronto-listed explorer Sintana and one other small driller. Junior explorer Sintana was an early buyer of licences to drill off the Namibian coast," Livsey wrote.