The National Petroleum Company of Namibia (NAMCOR) says it has no plans to ask the Ministry of Mines and Energy to increase its current 10% equity held in all exploration activities taking place in the country, including the two recent oil finds.
Immanuel Mulunga, the NAMCOR Managing Director, told The Brief that calls for an upward review of the company’s stake were ill-informed as the country would also benefit through various taxes and levies.
“It’s not necessary. It’s not a small matter, but people are trying to paint 10% as little,” he said.
“10% is not little, it’s massive. 10% is not the only contribution that Namibia will get. Namibia will enjoy royalties and taxes and additional corporate taxes on this discovery. The 10% is for NAMCOR and not for Namibia. Namibia will enjoy roughly 65% of the cake from this entire discovery more or less.”
Mulunga said there is a need to educate the general public about the oil industry and how it operates to ensure criticism is levelled from an informed position.
“What’s going to be a major undertaking is to educate the Namibian public about oil and gas development, and production. And also to manage people’s expectations. All of a suddenly everyone has become an expert on oil. People need to understand the sector before making assumptions,” he fumed.
“Many countries do not offer equity to their national oil companies. Governments only enjoy taxes and royalties.”
The NAMCOR boss also indicated that the 10% equity component the company receives from all exploration activities did not previously exist.
“I know a lot of people complain about NAMCOR’s 10% equity but it was not always there. It was only 10 years ago that minister Erkki Nghimtina made a directive that NAMCOR should get a 10%. NAMCOR never used to have a 10% stake in exploration activity,” Mulunga said.
“We were only a regulation advisor to the Ministry of Mines and Energy and we evolved to become a national oil company. So we need to thank the government for the 10%, it’s not that we are entitled to it. The 10% means NAMCOR directly enjoys the fruits of the discovery and puts us in a position to declare a dividend and make a huge contribution to the country.”
Ministry of Mines Spokesperson, Andreas Simon, said ,“the 10% participation interest held by NAMCOR is carried interest (not paid for during the exploration stage but to be paid for through proceeds from production). NAMCOR has the option, if their finances allow, to increase that percentage, but that increase will be on a working interest basis, not free.”
NAMCOR and its partners, Shell Namibia Upstream B.V and Qatar Energy, are said to have discovered a working petroleum system for light oil in the Orange Basin, 270 km from the town of Oranjemund, where drilling operations commenced in early December 2021 and were safely completed in early February 2022.
The company’s other partners, TotalEnergies, alongside QatarEnergy, and Impact Oil and Gas have also announced the Venus-1X discovery, located approximately 290 kilometres off the coast of Namibia, in the deep-water offshore exploration Block 2913B, which covers approximately 8,215 km².
President Hage Geingob, in a recent interview with Aljazeera, called for oil and mining sectors to create value which ensures that the country derives maximum gains from its resources.
