The National Petroleum Corporation of Namibia (NAMCOR) says it is looking to gradually increase its stake within oil and gas partnerships from the current 10%.
This comes as the Parliamentary Standing Committee on Natural Resources in 2022 called for the government to hold a 51% shareholding in companies investing in the petroleum sector through NAMCOR.
The country’s national oil company’s Head of Sustainable Energy, Frans Kalenga, said while a larger stake in exploratory efforts would provide NAMCOR with a greater share of potential profits, a large upfront investment is required, particularly for exploratory drilling.
“We believe increasing our stake in the partnership is the right path forward. However, this needs to be done gradually. Because in this industry, there’s no guarantee of success when drilling a well. Let’s say we ask GIPF, the government’s investment arm, for N$100 million to fund drilling under our 80% operatorship. If the well comes up dry, that money is lost. That’s why we advocate for a measured approach,” he said.
He further emphasized the importance of the company developing its operational expertise before taking on a larger role. This would involve acquiring the skills and experience necessary to become a successful operator.
“So we are saying we want to develop competencies while having a plan in motion, to make sure that over the years NAMCOR gains those skills that we have learnt and fully have enough equity in those licenses to be able to operate because our balance sheet is now strong,” Kalenga said.
National Planning Commission (NPC) Director General Obeth Kandjoze has , however, warned that Namibia risks bankruptcy if the government ups its current shareholding in ongoing exploration activities through NAMCOR, highlighting the capital-intensive nature of ventures, and cautioning that such pursuits could strain the country’s economic stability.
Namibia has made notable discoveries including the Graff-1X, Venus-1X, Jonker-1X, and Lesedi-1X, which are the product of partnerships involving major industry players such as Shell, Qatar Energy, Total, and Impact, in conjunction with NAMCOR.
Namibia is projected to register a gross domestic product (GDP) of U$37 billion at peak production level from the discovered oil reserves, with some quarters arguing the country’s biggest benefits will come from royalties and taxes, and additional corporate taxes.
