By Jon Hughes
I have worked in West African marine fuels for twenty years. While technical innovation and infrastructure have developed significantly in this time, the biggest change is that the region decided to own its own business.
When I started, shipping here was something that happened to Africa. International companies worked offshore, brought in what they needed, and most of the money left with them.
Finding a fuel supplier meant working through printed directories of agents and a Lloyd’s book on ports, then making phone calls and hoping. Nobody local was really in the conversation.
Today, local players are in action. Ports and regulators across the continent come to us with questions like: How do we make bunkering in our own port cheaper and more reliable? They are asking how to take a share of a market that runs past their coast.
Why the region changed its mind
Part of it was money. Countries that balanced their national budgets on oil exports were badly hurt when the oil price collapsed last decade.
When your budget rests on one number and that number halves, you learn a lot. Many West African governments came out of that period determined not to be so exposed again.
The answer they reached was services. Producing a barrel is one business. Supplying, moving, storing, repairing, crewing and fuelling is another, and it is steadier.
It employs more people. It does not vanish when the price moves. That thinking sits behind most of the local content policy in this region, and it is sound.
The difficulty is in the execution. This is where Namibia’s neighbours have done the whole region a service.
What it cost the neighbours to find out
Angola built its rules tight. Over the years, the requirements to use local firms — what the industry calls “local content” — became so demanding that working in the country cost too much. Some of these rules had to be pulled back.
The marine business is still tightly held by the national oil company. So tightly, in fact, that it cannot serve the whole market on its own, and private partners are now being brought in to help.
Angola also learned that money must be able to move. At one point it became so hard to get funds in and out of the country that investment stopped.
You can have all the oil in the world under your seabed. If you cannot get it to market, it is worth nothing.
Angola has been fixing both of those things, and it is a far more open place to do business than it was. But it took decades to create the problem, and it is taking years to undo.
Nigeria went a different way and built capacity. It now makes enough fuel for its own market, and the rules increasingly favour local fuel over imports.
There is a fair argument for that. If you build a refinery, you want some protection for it. But competition, rather than rules, protect buyers. Take the competition away and buyers pay more. So there is a balance to strike that is still being worked out.
Neither country had a model to copy. They worked it out in public, at their own cost. Namibia does not have to.
Namibia is starting with a clean sheet
Namibia has a state oil company, but it is small next to Angola’s. There is no refinery. For offshore work, almost everything the industry needs has to be shipped in.
That seems like a weakness. But I see this as an enormous opportunity for Namibia and its people.
Every service currently imported into Namibia is a business that could be Namibian: supply boats, fuel, logistics, maintenance, inspection, crew services, warehousing, waste handling.
None of it exists here at the scale the industry will need. And because none of it exists yet, Namibia gets to design its service industry based on the expertise and experience of its neighbours and international suppliers.
Self-sufficiency is built out of exactly this. Several hundred companies, each doing one job well enough that nobody needs to ship it in.
Energy-independence in the making
There is a version of local content that produces autonomy, and a version that produces dependence with extra steps.
The first pays for work. It makes it worthwhile for an international operator to train Namibians, hire Namibian firms and buy Namibian, because those firms can do the job.
Skills stay. Companies grow. After ten years the country can do things it could not do before.
The second only asks that a local name appears on the paperwork. Nothing is passed on. Nothing is learned. When the oil companies eventually leave, the country is where it started, minus the resource.
Namibia is choosing between those two now. The first local content proposals were firm and some have since been softened, which reads to me like a government working the balance carefully. The investment must be worth making, and the development must be real.
What self-sufficiency looks like in ten years
If you’ve got the crude, you have a stake in the supply chain. Without a local refinery, Namibia will need to continue to import refined products, even once its crude production capacity is fully developed.
However, this critical opportunity to develop the industry puts Namibia in a position of active participant and stakeholder in the supply chain, rather than the end-buyer alone.
I see Namibia’s future self-sufficiency as a lot of small and medium Namibian companies doing the work in the middle. Real firms with real staff who got the work because they were good at it. As opposed to politically connected people holding shares in blocks.
I see Namibia using the fuel it makes and selling the rest. Namibian fuel going north to the mines in Botswana and Zimbabwe, and south into South Africa. Energy independence would set Namibia apart in this region.
International companies will remain on the ground. They should. But the services supporting them will be Namibian-owned, and the money from that work staying.
None of this is decided by the seabed. It is decided in Windhoek and it is being decided now. Namibia is starting with a clean sheet and thirty years of examples next door. Very few countries get both, and I believe Namibia’s growth will be equally unique.
Ride the Next Wave.
* Jon Hughes, Managing Director Africa, Dan-Bunkering
