A two-day oil and gas conference this week sponsored by the country’s investment board looked at leveraging oil and gas resources for inclusive development.
Over 700 delegates including 200 international visitors attended the international conference on oil and gas in Namibia’s capital. The conference was aimed at designing a clear road map for Namibia’s emerging petroleum industry.
Speaking at the event, Petroleum Commissioner at the country’s ministry of mines and energy, Maggy Shino, said the recent oil finds will contribute significantly to Nambia’s GDP with 58% of total earnings going directly into the country’s treasury.
“While we are still in the pre-production phase,” he said, “what we are doing is ... putting together effective petroleum revenue management legislation. We want to ensure that the yields and the economic value that is going to be generated by these discoveries should benefit current and future generations, and that should be enshrined in our laws.”
The world — through the Paris Agreement passed in 2016 — has set an ambitious target of net zero carbon emissions by the year 2050 through the introduction of clean energy and synthetic fuels like green hydrogen.
Frans Kalenga, the head of Sustainable Energies at Namibia’s Petroleum Corporation, said Namibia’s Green Energy Drive would offset carbon emissions from oil and gas, and the two commodities can co-exist.
“The Europeans have come up with a mechanism called the CBAM,” he explained. "CBAM ... means Carbon Border Adjustment Mechanism. This means that for clients in Europe to buy commodities in Africa, for example, they are going to charge you heavily based on the amount of carbon that commodity carries. It’s their law.”
It was revealed at the conference that other countries such as India and China are introducing taxes for commodities that carry a large carbon footprint.
Independent economist Robin Sherbourne said Namibia should add value through on-shore oil storage and refinement in order to reap maximum benefits once production begins.
He also outlined additional challenges and opportunities the emerging sector could provide for the country — especially as an active shareholder, the Namibian government holds a 10% stake in oil and gas investments.
“I'm not commenting on whether this is a good or bad thing,” he said, “but certainly i a shareholder wants to maximize returns ... At the same time government is the regulator of the industry, and of course when you’re the regulator and you’re the player naturally there’s a conflict of interest. How do you balance that?”
Oil today trades at U.S. $80 per barrel, and although the price fluctuates according to supply and demand, the global appetite for oil means Namibia stands to gain significant cash inflow through taxes and royalties when the country reaches the production stage.
How to manage the cash inflow is one of the subjects that’s yet to be resolved.