Windhoek-Page through the documents on ownership and shareholding of companies exploring hydrocarbons onshore and offshore Namibia, and an interesting picture emerges.
For the past 20 years licences or petroleum exploration licences (PELs) have been changing hands as often – and easy – as changing undergarments. And within that process of constant changes in ownership, both direct and indirect, lay a much more complex layer of inter-twined and somewhat confusing shareholding structures through subsidiaries and offshore entities.
Amid such secrecy is the question of who really owns the many petroleum and gas exploration blocks in Namibia, and who have so far benefited from such licences. Has there been empowerment in the true sense of the word, and how has the country as a whole benefited from this sector?
Besides the nearly 50 PELs issued, the visible ownership by local Namibian individuals or truly Namibian entities can almost be counted on one hand. Yet not many of such individual Namibians with direct interests, listed as owners, and indirect interests are still associated with the licences as many have cashed in – which defeats the original idea by government to empower the locals by ushering them into that complex and cost intensive industry.
Many have, as did local and international entities, ages ago sold their portions to the international companies.
Yet their names remain listed on government registers. Very few companies have functioning offices in the country, that go beyond a mailbox or a legal company as the local representative.
One PEL is simply listed as represented by managerial secretary at a Windhoek based auditing firm, while its head office is in Luanda, Angola. Others include a prominent family whose interests in a relatively newly established entity, that owns blocks east of the Kudu Gas fields, are held through a blind trust.
Then there is Enigma Oil, which is co-owned by local businessman and pioneer of oil and gas exploration, Heinrich Steven Swapo Ndume.
The exception is cross ownership by the National Petroleum Corporation of Namibia (Namcor) – which by virtue of its constituting act of parliament – owns between seven and 10 percent interests in the many PELs currently active.
Fair equity participation or enriching a few: “I didn’t do it for money.”
“It is sad that when you give people something, to empower them, they go and buy expensive cars,” a sombre Ndume commented to Ne Era Weekend.
Ndume is one of the first black Namibians to get their hands on PELs and went on to chart the path to secure partnerships with international oil exploration companies. He holds direct ownership in Enigma Oil, in partnership with three other British nationals.
In its defence Namcor says it goes without saying that as a state-owned company with vested carried interest in most of the licenses granted to oil and gas exploration companies, it would be in the driving force behind the beneficiation process in the sector.
“In addition, we are heavily involved in the upstream and downstream aspect of the industry. Therefore, realisation of such commercial discoveries will be translated into revenues for the state,” Namcor’ spokesperson Nangombe Negumbo responded to New Era Weekend.
Ndume lists the decision to set up office in Namibia to facilitate knowledge transfer, the contribution to the geophysical exploration repository, and the reinvestments of his proceeds from the PELs into drilling and exploration as a patriotic commitment to the country.
“I chose to set up office in Windhoek, in the country, because ultimately it is about individual patriotism, how patriotic you are. How can there not be a functioning office in Windhoek, where I am based and in the country where I am from?
“I need an office not only to show that I am doing something but importantly to facilitate the knowledge transfer to locals, the young engineers and geo-scientists, and that is what my office in Windhoek has done.
“It is a commitment I have made, and I do not see how I can go back to my commitment, the promise I have made, to see this through. I was not in it for the money. As they say where there is a will there is a way,” he says.
And by his admission, Ndume said he did not enter the sector as a shortcut to a quick fortune but to realise a dream of owning a piece of an oil block. Hence, he moans about those who went the easy way, getting PELs only to sell them off to the highest bidder and realise a quick profit.
Namcor points out that oil and gas exploration is a long term investment and exploration activities are always ongoing despite the collapse in the oil price as of 2014 to date. The industry is heavily driven by the oil price and appetite for investors to risk their investments in certain regions.
Coupled with the low oil prices is also an opportunity for companies to undertake their exploration activities as a result of decrease in prices of services offered by technical companies.
“It’s prudent to say that the Namibian oil and gas industry is still at an exploration stage, however, the outlook on the industry looks positive for Namibia; with the recent discovery of non-commercial reserve highlighted that the petroleum system is working and in place,” says Negumbo.
Is there hope for oil discovery in Namibia?
An optimistic Ndume says there is such a hope. In fact he says his only regret, or what he would do differently, were he to start all over again, would be to concentrate on the offshore blocks.
“I would this time look into the deeper water. All indications now show that that is where the real discovery are likely to be. There is still hope for the offshore explorations,” says Ndume, adding that Enigma is now concentrating on the Walvis Bay Basin.
Namcor too is optimistic. “Yes, hopes are definitely there for a commercial discovery. With the recent exploration activities by minor and major oil and gas companies in Namibia acquiring more data especially 2D and 3D seismic data and conducting technical studies to de-risk their prospects. We see these efforts as a major milestone toward drilling and ultimately a discovery. It goes without saying that other oil majors have also shown their keen interest in acquiring acreage offshore Namibia; clearly demonstrating the huge potential still within our basins.”
*This story first appeared in New Era Weekend.