Locals to earn N$7bn out of Venus' N$260bn build-out

Only N$7 billion of the estimated N$260 billion expenditure required to develop TotalEnergies' Venus offshore oil project is expected to become income for Namibian businesses and workers during construction, according to Cirrus Securities' analysis of the project's economic contribution.The investment research firm has also calculated that a one-year delay to the final investment decision (FID) could reduce the present value of Namibia's future petroleum revenue by N$2.6 billion to N$4.9 billion.In its report, High Stakes, Thin Buffers: The Cost of a Delayed Venus FID, Cirrus warned that postponing the investment decision could increase development costs, delay government revenue and weaken investor confidence at a time when Namibia faces substantial borrowing requirements.Explaining the report's expenditure estimates, Cirrus said the N$7 billion local income figure was drawn from the project's Environmental and Social Impact Assessment (ESIA).The amount represents approximately 3% of estimated development expenditure, equivalent to slightly more than N$2 billion annually during construction.Cirrus attributed the relatively small domestic share to imported production infrastructure, subsea equipment, drilling rigs and specialised services.The firm explained that Namibian suppliers could sell between N$25 billion and N$35 billion worth of goods and services during construction, although most of that value would consist of imports.Citing ESIA assumptions, Cirrus said Namibian suppliers could secure approximately 20% of contracts outside the floating production, storage and offloading vessel, but only a quarter of what they supplied would be produced locally.The N$25 billion to N$35 billion therefore represents potential supplier sales, while N$7 billion reflects income expected to accrue to Namibian businesses and workers.Cirrus cautioned that comparing the N$260 billion expenditure directly with Namibia's N$293.7 billion economy overstates the project's immediate domestic contribution.It explained that its expenditure estimate incorporates a US$15 billion development-cost assumption and capitalised operating expenditure, compared with the ESIA's US$12 billion development-cost projection.Principal scenarioCirrus' report projects that Namibia's economy could reach N$545 billion by 2032 if Venus proceeds, compared with N$365 billion under its principal scenario without the investment.The N$180 billion difference reflects both petroleum production and assumptions about economic performance outside the oil sector.Cirrus said approximately N$94 billion represents Venus-related economic output, while N$86 billion arises from weaker growth assumed elsewhere in the economy without the project.At US$75 per barrel, direct petroleum production would contribute approximately N$89 billion to GDP in 2032, increasing to N$94 billion when associated local supplier activity is included.The N$545 billion projection assumes annual inflation of 4.4% and real growth of 3% outside petroleum.The principal no-investment scenario assumes a 1% economic contraction in 2028, followed by prolonged weak growth.Cirrus explained that if Namibia instead achieved annual real growth of 4% without Venus, nominal GDP could reach N$482 billion by 2032, narrowing the difference to N$63 billion.The firm also cautioned that much of the income generated by oil production would accrue to petroleum companies rather than Namibian residents.Consequently, its projected reduction in government debt to 60% of GDP by 2032 would largely reflect a bigger economy rather than petroleum revenue being used to repay debt.Govt revenue could take six yearsThe report, drawing on the ESIA, estimates cumulative government petroleum revenue of N$127 billion to N$229 billion over 25 years.Cirrus explained that Namibia could initially receive N$2 billion to N$5 billion annually, increasing to N$11 billion to N$20 billion during peak years once petroleum income tax becomes payable.At US$75 per barrel, the 35% petroleum income tax could begin four years after first oil, lifting annual government receipts to approximately N$19 billion.At US$50, the tax could begin only after six years, when receipts would reach approximately N$7 billion.Before petroleum income tax becomes payable, the government would principally collect a 5% royalty and a 1.5% export levy.The ESIA assumed first oil in 2029, whereas TotalEnergies now plans for 2030. Under that timeline, Cirrus estimates government receipts of N$3 billion to N$5 billion in 2032, with substantial petroleum income tax potentially beginning between 2034 and 2036.Delays threaten future revenueCirrus' report warns that prolonged uncertainty over the FID could postpone production, increase development costs and undermine investor confidence.Explaining the financial implications, the firm calculated that a one-year delay could reduce the present value of future government petroleum revenue by N$2.6 billion to N$4.9 billion.This measures the cost of receiving revenue later, rather than an equivalent amount necessarily being permanently lost.A delay would move first oil from 2030 to 2031 and postpone petroleum income tax receipts to approximately 2035–2037.Cirrus estimates cumulative government receipts by 2035 could fall from N$17 billion–N$56 billion to N$14 billion–N$36 billion, depending on oil prices.If renewed contractor tenders increased development costs by 5%, the reduction in revenue's present value could rise to 6%–8%.The firm warned that contractor offers cannot be extended indefinitely and that re-tendering could push first oil beyond 2031.TotalEnergies and the government missed their end-July 2026 investment decision target. At the company's third-quarter results on 29 October, chief executive Patrick Pouyanné expressed optimism but announced no new decision date.Cirrus warned that continued uncertainty could also weigh on investor confidence as Namibia prepares to refinance approximately N$8.3 billion in government debt during 2027.

Locals to earn N$7bn out of Venus' N$260bn build-out

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Namibian Sun 2026-11-12

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Locals to earn N$7bn out of Venus' N$260bn build-out

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Namibian Sun 2026-11-12

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