Namibia should not measure the success of its emerging petroleum industry by producing its first barrel of oil, the government says, and the real test will be whether the sector leaves behind stronger local businesses, infrastructure, skills, industrial capacity and lasting revenues.
Special Advisor and Head of the Upstream Petroleum Unit in the Presidency, Kornelia Shilunga, said Namibia needed to prepare beyond the anticipated start of commercial production and ensure petroleum development became a platform for wider economic transformation.
“The first barrel will be an important milestone, but it cannot be the destination,” Shilunga told the Namibia Oil and Gas Conference in Windhoek on Wednesday.
“The real dividend must be reflected in jobs, stronger Namibian businesses, improved infrastructure, technology transfer, skills development, increased government revenues, industrial growth and improved opportunities for future generations.”
Her comments come as Namibia moves closer to decisions that could turn offshore discoveries into producing projects, with government currently engaged in discussions around a final investment decision for TotalEnergies’ Venus development.
Shilunga said government was already looking beyond upstream production towards industries that could be established around petroleum investment, including refining, petrochemicals, gas-to-power, logistics, fabrication, marine services, storage and engineering.
“If we simply extract crude oil and export it, we will have captured only a portion of the value contained in our petroleum resources. Our ambition must be greater,” she said.
She said the petroleum industry should become an anchor for wider industrial development, in line with the Sixth National Development Plan’s objective of using natural resources to drive diversification, industrialisation, value addition and employment rather than maintaining an economy dependent primarily on exporting raw resources.
Government looks beyond crude exports
The position puts downstream and supporting industries at the centre of government’s expectations from petroleum development rather than treating crude production and export revenues as the end objective.
Shilunga said the Orange Basin discoveries had fundamentally changed the outlook for Namibia’s upstream industry, but had simultaneously created a responsibility to ensure development translated into sustainable economic opportunities.
The government’s role was therefore no longer confined to facilitating exploration and production, but also included establishing the policy, legislative and institutional environment required to develop a competitive domestic petroleum industry.
That work includes reviewing the country’s petroleum legal and fiscal regime, reconsidering the licensing framework and how future exploration blocks will be issued, and implementing the recently Cabinet-approved National Upstream Local Content Policy.
The local content framework is intended to increase Namibian participation through businesses, employment, skills and technology transfer and procurement, although Shilunga said participation alone would not be sufficient.
She wants Namibian businesses to build the expertise, capacity and financial strength required to compete within the petroleum industry and eventually internationally.
Walvis Bay and Lüderitz part of the dividend
Infrastructure is another part of the economic legacy government wants petroleum development to create.
Shilunga identified Walvis Bay and Lüderitz as potential service and logistics hubs for offshore petroleum operations, saying ports, logistics networks, supply bases, roads and airports would become increasingly important as projects move towards development.
The government would have to ensure infrastructure development kept pace with opportunities emerging from the upstream industry.
The objective also extends beyond the productive life of the oilfields.
Shilunga said petroleum revenues would have to be managed prudently and transparently so that benefits generated from today’s resources continued after production ended.
This would require strong institutions, sound governance, environmental responsibility, accountability and long-term planning.
Namibia is meanwhile working on converting discoveries already made into commercial projects.
The government is engaged with TotalEnergies on a final investment decision for Venus and, more broadly, with operators on what is required to move major discoveries from exploration into development.
Shilunga said the question facing Namibia had consequently moved beyond whether the country had petroleum resources.
“The question before us is no longer simply ‘Does Namibia have oil?’” she said.
The more important question, according to Shilunga, is “What will Namibia do with the opportunity that oil and gas presents?”
She answered that Namibians should ultimately emerge from the petroleum era not merely as observers, but as “participants, owners, employees, entrepreneurs, professionals and beneficiaries” of the industry.
