The Namibian government has excluded any projected oil and gas revenue from its 2026/27 fiscal framework, opting instead to base the national budget solely on existing revenue streams while offshore petroleum projects remain at an early stage of development.
Executive Director in the Ministry of Finance, Oscar Capelao, confirmed the approach during a National Budget in Focus session hosted by Deloitte Namibia and Cirrus Capital in Windhoek.
Capelao said the budget presented by government does not assume any income from recent offshore discoveries, despite growing exploration success in Namibia’s Orange Basin.
“We have not taken any oil revenue or upside in this budget. This indicates a base budget. Any oil-related benefits will be to the upside of what we presented here,” he said.
He noted that it would be fiscally irresponsible for government to factor in oil revenues before a Final Investment Decision (FID) has been reached and development timelines confirmed by operators.
“When FID happens we shake hands. It will take at least five years of development before first oil arrives. Therefore, to already bet on oil and start spending would not be responsible,” Capelao said.
According to Capelao, maintaining a conservative fiscal stance protects the budget from potential downward revisions should development timelines shift or projects face delays.
He said government would only begin incorporating petroleum revenues into fiscal projections once investment decisions are finalised and production schedules are clearer.
Capelao also indicated that aspects of Namibia’s petroleum fiscal framework are currently under review to reflect the technical realities of the country’s recent discoveries.
While describing the existing Petroleum Tax Act as fundamentally sound, he acknowledged that the legislation was developed in a different exploration context.
“Yes, the piece of legislation is old, but it’s sound. We’ve had technical advice from multiple friends of the country who looked at it and said your legislation is sound,” he said.
However, he explained that fiscal regimes typically vary depending on the nature of petroleum discoveries, whether onshore, shallow water, deep water or ultra-deep offshore.
Namibia’s recent discoveries fall into the ultra-deep offshore category, involving operations roughly 350 kilometres offshore and drilling depths of around six kilometres below sea level.
“Those are not easy geographies to work with,” Capelao said.
He added that several Atlantic African producers have had to adapt their fiscal frameworks to accommodate the high costs and technical complexity associated with ultra-deep offshore developments.
Capelao stressed that any adjustments being considered are intended to ensure commercial viability for operators while preserving the integrity of Namibia’s legislative framework and safeguarding national interests.
