Namibia must earn its spot in oil value chain, advisor says

Special advisor and deputy head of the upstream petroleum unit Carlo McLeod says policy alone cannot create a competitive local supplier base, adding that Namibia cannot simply legislate its way into the oil and gas value chain.

He said the country must instead build capacity through skills, standards and a clear understanding of what international oil companies and Tier 2 service providers require when issuing tenders.

This follows an announcement by President Netumbo Nandi-Ndaitwah that Cabinet has approved, in principle, the upstream local content policy after extensive nationwide consultations.

The policy is designed to ensure that the development of Namibia’s petroleum resources translates into tangible socio-economic benefits for all citizens.

“As Namibia transitions from exploration to development, the focus is on execution, timely project delivery and value realisation,” Nandi-Ndaitwah said at the recently held 8th Namibia International Energy Conference in Windhoek.

"Partnership remains central to achieving these objectives,” she added.

“While first oil is a critical landmark, it is not the end goal. The objective is structural transformation, inclusive growth and long-term prosperity," she noted.

Real opportunities

Speaking at the upstream oil and gas local suppliers workshop, McLeod said the upstream petroleum policy is not a wish list.

“It is a framework that requires exploration companies and their service contractors to prioritise Namibian suppliers, to hire Namibian workers, and to build Namibian capability," he said.

He added that the Presidency "stands squarely behind this policy and will enforce it with full vigour".

McLeod said that when global leaders in drilling, completion, production and engineering services sit across the table from Namibian SMEs and explain their procurement standards, technical requirements, and expectations, they are handing local businesses a roadmap.

“Your task, as entrepreneurs, is to follow that roadmap and our task as government is to remove every obstacle we can from your path,” he said.

Speaking directly to Namibian entrepreneurs and business owners, McLeod said they are not bystanders to this oil and gas story.

“You are principal characters in it."

He explained that Namibia's upstream sector will require "an extraordinary range" of goods and services, including logistics and transportation, catering and hospitality services, environmental and waste management services, fabrication and engineering, IT and communications infrastructure, training and human resources, and legal and financial services.

“But global oil and gas companies operate to strict international standards,” he stressed, adding that “these are not bureaucratic obstacles. They are the language of the industry, and you must speak that language fluently if you want a seat at the table."

‘Attractive’ prospects

International oil companies have revealed different cost profiles.

Speaking at the just-ended conference, ReconAfrica CEO Brian Reinsborough said Namibia’s onshore wells can be drilled for a fraction of the cost of offshore wells.

“We’re testing large prospects, half a billion barrel-sized prospects, for US$12 million. In deepwater you’re doing the same thing for US$120 million, so the economics are really attractive,” he said.

TotalEnergies boss Patrick Pouyanné has indicated that cost competitiveness remains the key condition for development.

“Projects are technically challenging but commercially viable,” Pouyanné has said, adding that developments must remain competitive, with breakeven levels that can fall below US$50 per barrel.

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