Namibia should avoid signing long-term petroleum contracts that could restrict its ability to change environmental, health and other laws as circumstances and scientific knowledge evolve, Columbia University adjunct professor Jenik Radon has warned.
Radon said to pay particular attention to stabilisation clauses, which can protect petroleum investors against the financial consequences of changes in a country’s laws over the life of a project.
Speaking at the Bank of Namibia’s 2026 Annual Symposium on Thursday, Radon said petroleum contracts can run for 30 to 50 years, making the terms negotiated before production critical to Namibia’s ability to regulate the industry in future.
“Stabilisation = Freezing of Laws for 30+ years,” Radon’s presentation states.
He argued that environmental and health knowledge would change during such lengthy contracts, potentially requiring Namibia to introduce new laws or strengthen existing regulations.
“Should there be a stabilisation clause?” Radon asked, before answering: “No, except very limited financial stability.”
Radon’s concern centres on contractual provisions designed to protect investors when subsequent legislative changes affect a project’s economics.
His presentation illustrated the issue with an example of a clause requiring parties to restore the economic benefits a company would have enjoyed if a legislative change had not occurred.
Such provisions can become particularly important in an industry where projects operate for decades.
Radon said environmental and health knowledge advances over time, requiring governments to retain the ability to update and amend their laws.
He also questioned why petroleum companies should not bear costs from stronger regulatory requirements introduced during a project’s life.
His presentation showed the petroleum lifecycle extending over 40 to 50 years, from exploration and development through production and eventual abandonment.
Radon also cautioned Namibia against vague language in petroleum agreements, including provisions requiring companies to follow “good oil field practices” or environmental and safety standards generally accepted by the international petroleum industry.
He questioned who determines what constitutes an internationally accepted standard and warned against contractual arrangements that effectively allow the regulated company to set the standards governing its operations.
“Regulated party/company should not write its own rules,” his presentation states.
Radon argued that petroleum agreements require detailed attention to areas including stabilisation clauses, cost recovery, taxation, arbitration, force majeure, decommissioning and transfer pricing.
“The devil is in the (boring) details: in the laws, in the regulations, in the contracts, in the international treaties,” his presentation states, warning that these instruments are too often ambiguous, vague or open to interpretation.
Radon also raised the question of whether governments should have greater access to information about the returns petroleum companies expect from their investments.
“What is the Company ROI? Need to Know,” the presentation states.
He asked whether companies should be required to disclose investment returns and whether governments should consider windfall or super-profits taxes. These were presented as questions for consideration rather than specific proposals for Namibia.
Transfer pricing was another area highlighted as requiring close scrutiny.
Radon identified transactions between parent companies and operating companies, contracts with affiliates, inter-company loans, interest rates and the valuation of intellectual property among areas where determining the appropriate price can be difficult.
“It is art at best, not a science. Can be profit shifting,” the presentation states.
Radon also called for greater transparency, arguing that petroleum agreements should generally be publicly disclosed, except for legitimate technical intellectual property.
His presentation called for disclosing necessary information to regulatory and tax authorities, including agreement terms and chemicals used in operations.
The broader challenge for Namibia, he said, is ensuring that government possesses expertise comparable to that available to well-funded international petroleum companies.
“The Answer: Negotiate better • Negotiate with knowledge. Negotiate with expertise, And draft well,” his presentation states.
Radon said Namibia needs to build legal, technical, financial and accounting expertise capable of negotiating and managing petroleum projects “on equal footing with well funded companies”. He acknowledged that outside experts could provide support while local expertise is developed.
He advocated deliberate development backed by strong institutions, professional expertise, revenue management and environmental and health safeguards rather than rushing petroleum projects before the necessary systems are in place.
He summed up his message to emerging petroleum producers in the presentation: “Go slow is to go fast.”
