The Ministry of Mines and Energy’s Petroleum Commissioner Maggy Shino says Namibia should not fall prey to disintegration due to reckless borrowing and spending as well as weaker monitoring and evaluation policies, owing to the discovery of oil in the country.
Shino said history has proven that the majority of countries where oil has been discovered have been left in ruins.
“Economic mismanagement can be another aspect of convincing oneself that prosperity is still coming due to ongoing drilling, thinking money is coming in. On the other hand, at the grassroots level, people will stop cultivating mahangu fields because of oil availability, don’t worry money is coming.
“Unsustainable debt, the mindset of, I am going to take all the billions of dollars because I know finances will start flowing in. There are also socio-political issues we have to ensure that are there. If you don’t have strong institutions, weak regulatory framework, lack transparency, all these issues can break the nation,” Shino said.
The Petroleum Commissioner said this at the ongoing stakeholders’ workshop on the draft National Upstream Petroleum Local Content Policy.
The policy, once finalised, will seek to create an internationally competitive petroleum sector that maximises the benefits to the country through meaningful and sustainable participation by Namibians and local companies across all areas of the value chain.
In addition, it will also aim to maximise the benefits to Namibian citizens from petroleum resources through the enhancement and development of strategies that will target phased participation of Namibian companies, labour, goods and services, along the value chain.
Sharing a similar sentiment, Mines and Energy Minister Tom Alweendo said: “It has been proven that countries with strong institutions, a stable political system and an effective legal framework were able to manage their oil revenue with a positive impact on their economies and for the benefits of their citizens.”
Alweendo is hopeful that the established sovereign wealth fund – Welwitschia Fund – which is to be used as an investment holding where royalties from all mineral resources sold in Namibia as well as some tax revenues and money raised by the government will be invested, shall amplify the potential benefits to be realised from the petroleum sector.
“I have reason to believe that our institutions, our political system, and our legal framework are such that there is no reason why the oil discovery should not be a blessing. What we need to do, however, is to manage the resources with a clear understanding that the resources belong to both the current and future generations,” said an optimistic Alweendo.
The stakeholders’ workshop on the policy follows the discovery of oil offshore Namibia, hence the government’s stance to craft regulations and policies that will govern the nascent oil industry.
A third discovery was announced in March of a significant presence of light oil in the Jonker-1X deep-water exploration well, located in the offshore region approximately 270 kilometres off the Namibian coast.
The exploration was carried out in partnership with QatarEnergy and Shell, as well as National Petroleum Corporation of Namibia (NAMCOR).
The Jonker-1X well was drilled in the Orange Basin, Block 2913A & 2914B (PEL 0039) using the Odfjell Deepsea Bollsta semi-submersible rig to a depth of 6,168 meters in a water depth of 2,210 meters.
In 2022 QatarEnergy and Shell made the debut discovery in Graff-1 PEL-39 in the orange basin. Currently, the investors are conducting appraisals to determine the commercial viability of the oil. There are 37 active exploration licences, and 36 dry wells have been drilled in Namibia prior to the recent discovery.
Shino also pointed out that Namibia is still a high risk exploration country due to the sophistication of operating in deep water exacerbated by a lack of existing infrastructure for the industry.
