November 01, 2024
Economy

Alweendo calls for patience on oil discovery

March 17, 2022
Alweendo calls for patience on oil discovery

Mines and Energy Minister Tom Alweendo says Namibia’s recent oil discovery will not immediately translates into economic development.

The country recently made significant oil discoveries leading many people expecting to start reaping huge rewards of the precious liquid as is the case with other oil-rich nations such as the United Arab Emirates and the United States.

 “While the discovery is good news for all of us, we need to understand that we will not have a production of crude oil tomorrow. We need to be aware that more analytical work needs to be done before the construction of the platforms to extract the oil commences. We therefore need to exercise a bit of patience, provided of course that our patience should not prevent us from doing what needs to be done in preparation of when the production commences,” Alweendo said.

The minister was, however, quick to point out that the oil extracting process for Namibia might prove more costly compared to other jurisdictions, with the reserve located in deep water, in the Atlantic Ocean.

“Given the fact that this will be deep water extraction, the extraction cost is likely to be much higher than in some other jurisdictions. Oil extraction cost is lowest in the Middle East,” he said.

Shell Namibia Upstream B.V and Qatar Energy, in partnership with the National Petroleum Company of Namibia (NAMCOR), recently announced that they 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.

Alweendo further indicated that Namibia’s policies will be key in determining how the discoveries impact the country socially and economically, amid concern that oil discoveries have had a negative impact in some countries where oil has been discovered.

“We know of countries where the discovery of oil became a curse and there are also countries where the discovery became a blessing. I would like to believe that we all want our discovery to be a blessing rather than a curse. However, for it to be a blessing hinges mostly on our policy environment, especially our institutional and political aspects of it. 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 the economy and for the benefits of their citizens,” the Mines and Energy minister said.

“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. Therefore the management of the resources must benefit both generations. The recent establishment of the sovereign wealth fund, the Welwitschia, is a clear move in the right direction.”

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Last modified on Sunday, 20 March 2022 16:23
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