Namibia is projected to generate between N$127 billion and N$229 billion (approximately US$7 billion to US$13 billion) over the 25-year life of the proposed Venus oil development, according to the project’s environmental and social impact assessment (ESIA).
Over the life of the project, oil production revenues are expected to account for between 7.9% and 14.2% of total government revenue, based on oil prices of US$50 and US$75 per barrel, respectively, the ESIA said.
“Based on these estimates, total government revenue from the project could amount to between N$127 billion and N$229 billion (approximately US$7 billion to US$13 billion) over a 25-year period,” the report stated.
The ESIA noted that if oil prices and revenues exceed expectations while operating costs remain unchanged, additional profit tax (APT) could be triggered, generating further revenue for the State, although this scenario has not been modelled. As production declines over time, revenues from royalties and export levies would also decrease, it added.
The proposed Venus development is being advanced by a joint venture comprising TotalEnergies with a 45.25% interest, QatarEnergy holding 35.25%, Impact Oil and Gas with 9.5%, and the National Petroleum Corporation of Namibia (Namcor) with a 10% stake.
According to the ESIA, the project’s contribution to government revenue will depend largely on Namibia’s petroleum taxation regime and the timing of cost recovery following first oil.
During the initial years of production, development costs will be deducted and losses carried forward, meaning the project is unlikely to generate petroleum income tax (PIT) in its early phase.
“During this period, government revenue will mainly comprise royalties and export levies, both of which will be relatively high due to elevated production levels,” the report said.
“Once investment costs have been recovered, the project will begin paying petroleum income tax, with PIT revenues exceeding royalty and export levy income, which will continue for as long as production and exports take place,” it added.
The ESIA also outlines that Namcor is likely to repay its carried-free stake in the Venus 1-X offshore oil development within six years, provided global demand for oil and gas remains strong.
“Based on Namcor’s 10% stake in the joint venture, a simple calculation suggests that Namcor could repay approximately US$1.2 billion within four years at an oil price of US$75 per barrel, and within six years at an oil price of US$50 per barrel,” the report said.
Under the carried-free arrangement, Namcor will not earn revenue from the project until its share of development costs has been fully repaid after first oil (FO).
“Once these costs have been recovered, revenues would accrue fully to Namcor. The decision on whether profits are paid to its shareholder, the government, or retained for future operations would be taken at that stage,” the ESIA added.
As Namcor is wholly state-owned, revenues generated from its shareholding ultimately accrue to the State. However, the report cautioned that the fiscal impact of the project will evolve over time, with early revenue flows driven by production-linked levies and longer-term returns dependent on sustained output, price conditions and cost recovery.
