NAMCOR
NAMCOR
Investing in
Namibia’s Future PRODUCTION: David Napier
Namibia is hoping that an economic turnaround can come courtesy of a boom in oil, gas and energy, a sector where the country holds major potential but is yet to execute on a meaningful scale. Key in this strategy is parastatal, NAMCOR, where new deals are fuelling optimism about future growth. 2 / www.enterprise-africa.net
INDUSTRY FOCUS: ENERGY
//
The Namibian economy is in something of a perilous state. After independence in 1990, the country went through a period of steady and sustained growth, posting strong GDP figures, right up until the global financial crisis of 2008. After a small recovery after 2010, the economy is again in a difficult position with the Bank of Namibia suggesting that 2019 could see the economy contract by 1.7% following a shrinking of 0.1% in 2018. “The expected deeper contraction during 2019 will be in line with the devastating drought being experienced currently and the anticipated contractions in major sectors such as diamond mining and wholesale and retail trade,” the bank said. Traditionally strong in agriculture, fishing, mining, and with a focus on growing the manufacturing and tourism sectors, Namibia is a facing a changing landscape where what it knows may not be able to provide all that is needed to bring back growth levels of more than 5%. NAMCOR, the country’s stateowned upstream and downstream energy business, is hoping that the key to unlocking the potential of the Namibian economy is going to come in the form of investment and job creation through a booming energy commodities industry. The country, largely a desert nation, is home to large deposits of mineral
// SWAKOP URANIUM IS GOING TO ENTRUST THIS KEY SERVICE TO NAMCOR, A RESPONSIBILITY TO ENSURE THE MINE CONTINUES UNHINDERED THE NEXT FIVE YEARS // 4 / www.enterprise-africa.net
resource and exploiting these valuable products could become an opportunity too important for the government to turn down. Established in 1967, NAMCOR is responsible for reconnaissance, exploration and production operations either on its own or in partnership with other organisations in the industry, and holds the mission of becoming a worldclass petroleum organisation providing sustainable benefits to all stakeholders. The company is headed by Managing Director, Immanuel Mulunga, who is busy penning deals that will help to open up the sector alongside international experts, helping to drive value across Namibia. He tells Enterprise Africa that, across various different projects, the company is already starting to see positivity. “We are working new terminals, nine new fuel stations, new international partnerships, new exploration licenses and the national oil storage facility at the Port of Walvis Bay. We have a number of big projects underway and we are aiming to double the size of our business over the next five years.” In the previous tax year, NAMCOR reported revenues of around $1 billion and its business expansion project has been approved by both the Board and the government. NEW DEALS At the end of August, Mulunga was present at a singing event to announce that NAMCOR had struck a deal with owner of the Husab mine in Erongo, CGN Swakop Uranium, which will see the company supply fuels and lubricants to the mining operation for the next five years. The deal is worth N$3.2 million. This is a major coup for NAMCOR and represents 60% of the company’s annual turnover. As one of the world’s largest uranium mines, the demand for fuel from Husab is vast and, with plans to 5000 tonnes of uranium ready for export by the end of the year, this deal is
// WE WILL EMPLOY OUR SIGNIFICANT UPSTREAM EXPERIENCE AND TECHNOLOGICAL EXPERTISE AND WORK IN CLOSE COLLABORATION WITH NAMCOR IN EXPLORING THESE BLOCKS // important. The main destination for the supply in China. “Swakop Uranium is going to entrust this key service to NAMCOR, a responsibility to ensure the mine continues unhindered the next five years,” said Swakop Uranium’s Chief Operations Officer, Angula Kalili. Previously, fuel had been supplied by Engen and, now that the mine is out of construction and into export operations, additional fuel is required. The mine supports more than 1650 employees on a permanent basis and an additional 500 contract workers of which 96% are Namibians. The life expectancy of the mine goes through until 2036 and China sees the project as a major contributor to its nuclear energy stability. Mulunga called the contract gain a ‘milestone for NAMCOR’ and reiterated that the company’s status as a government-owned business played no part in its landing of the contract. “The media must note that this contract was not just handed over to NAMCOR because we are stateowned. We had to compete with bigger international companies and pass through strict processes to succeed. We had to create value through competitive pricing. We are competing for market share locally and internationally.”
NAMCOR
multi-disciplinary consulting engineers & project managers Om’kumoh Consulting Engineers cc is a multi-disciplinary engineering consultancy corporation founded in 2010. Over the last decade the firm expanded its activities across Namibia and Angola. The corporation’s project footprint now covers various fields, ranging from its initial core fields of building and municipal services to more specialized fields of water engineering, roads infrastructure and more recently petroleum sector. With the ever changing infrastructural needs of a developing country, such as Namibia, Om’kumoh has been an instrumental partner to Namcor in its expansion driven in the downstream petroleum sector in terms of designing and supervision of bulk fuel installations with the largest project currently nearing commissioning. We pride ourselves with the diverse in-house as well as expert associate knowledge base, technical capabilities and modern software resources such as Revit & Prokon to deliver innovative solutions to our clientele, whilst maintaining a competitive edge in engineering consultancy and project management.
: +264 61 232 052 | : +264 61 232 053 | : admin@omkumoh.com : PO Box 98195, Pelican Square, Windhoek, Namibia
OFFSHORE BLOCKS In April, NAMCOR came to an agreement with international energy giant, ExxonMobil. The USheadquartered business hasn’t been shy when it comes to investing in African assets and this latest acquisition will see it gain four exploration blocks totalling around seven million acres in Namibian waters. “These agreements provide ExxonMobil with an opportunity to explore for hydrocarbons using advanced technology in the frontier Namibe basin,” said Mike Cousins, senior vice president of exploration and new ventures at ExxonMobil. “We will employ our significant upstream experience and technological expertise and work in close collaboration with NAMCOR in exploring these blocks.” The blocks, which sit in water
depths of up to 13,000 feet, are located next to the shore line and extend out to around 135 miles off the coast. ExxonMobil will operate blocks 1710 and 1810 and hold a 90% interest; NAMCOR will hold a 10% interest. ExxonMobil will assign 5% of its interest to a local Namibian company. ExxonMobil will be operator of blocks 1711 and 1811A, and will hold an 85% interest. NAMCOR will retain a 15% interest. “We have no influence on who will be given the 5%; they will decide themselves. But I am sure they will conduct the necessary due diligence to see who is fit for the 5% stake,” Mulunga told the Namibian. Reports suggest that the blocks were acquired for ‘millions of US Dollars’ and some suggest the move represents a gamble for ExxonMobil
considering no commercially viable oil source has been discovered across the 18 wells dug in Namibia since independence. “The agreement took the form of a normal oil and gas exploration contract. But due to the sensitivity of trade secrets and to protect the interests of the other party, we are not comfortable with giving the amount yet, but it was for several US dollars,” Mulunga told the Namibian. Set to start in 2019, the exploration license lasts four years and, should no oil be found, ExxonMobil would have to renew the license in the future. In August, other international giants Qatar Petroleum (QP) and Total signed agreements to acquire exploration licenses for two blocks. QP will take a 30% interest in block 2913B, while Total will take a
www.enterprise-africa.net / 5
INDUSTRY FOCUS: ENERGY
40% interest and will operate the block. Impact Oil and Namcor are also partners on the block, with 20% and 10% stakes respectively. Drilling will being in 2020. “Working on these prospective frontier blocks with our valuable long-term partner, Total, will give another boost to our efforts towards implementing our international growth strategy,” said Saad al-Kaabi, CEO of QP and minister of state for energy affairs in Qatar. With major companies now showing real interest in Namibia, the oil optimists in the country are excited after prospects declined during the 2014 oil price slump.
6 / www.enterprise-africa.net
NEW NAMCOR In 2017, NAMCOR started a strategic investment through which it would rebrand its corporate identity and start its own fuel retail business, opening new fuel stations at locations across the country. The company sees supply of fuel into more rural areas as important for the government and for NAMCOR’s downstream business growth. It marks the company’s conclusion of a fully integrated move across the entire value chain for petroleum products. “Renovation, upgrading and actual construction of essential infrastructure is ongoing and planned for in Ondangwa, Grootfontein, Gobabis and
Otjiwarongo,” said Mulunga. In May, the company stated that the new retail site in Otavi was 30% complete; in February, the site at Ongwediva was 80% complete; and the site at Hosea Kutako was also 80% done. The bright, new, orange, red and yellow logo will adorn the new fuel retail sites with the company hoping for a strong connection with Namibian customers right from the outset. Entry into the fuel retail industry will be backed up by NAMCOR’s involvement in new fuel depots and the terminal at Walvis Bay. Estimated to cost N$5.6 billion, the National Oil Storage project is cited by Minister of Mines and Energy,
NAMCOR
Tom Alweendo as a catalyst for future economic growth. It was announced last year that NAMCOR would manage the facility, which will be able to store 70 million litres of petroleum products such as petrol, diesel, paraffin and others, on behalf of the government. STRONG FUTURE Having tabled results last year that detail income of N$575 million for the 2016/17 financial year, the future looks exciting for NAMCOR. With the above mentioned deals adding to a busy schedule, and with the roll out of the fuel retail sites around the country, the company’s plan to double in size looks to be on track so far. “Despite [economic] challenges, the group realised revenues of N$23 million from the sale of seismic data. The group’s financial position remains
stable and robust, with cash reserves of N$453 million,” said Mulunga in June last year. The ongoing Kudu gas project is also a source of excitement for the business going forward. Identified as a solution to Namibia’s looming energy crisis, the Kudu gas project is being given significant attention from NAMCOR and the rest of the industry. Located 170km off the Namibian coast, gas from the Kudu field will be transported through an undersea pipeline to an onshore power station in Uubvlei. Reports suggest that the field, located in the Orange Sub-Basin, could hold three trillion cubic feet of proven natural gas reserves. Some optimists expect that, after further development work is completed, the field could contain nine trillion cubic feet.
NAMCOR has entered into initial power purchase agreements with Eskom of South Africa and Copperbelt Energy Corporation of Zambia, and it expecting to export power that cannot be distributed through the 400 MW power station close to Oranjemund. Despite the concerns surrounding Namibia’s economy, NAMCOR is doing everything it can to rejuvenate international interest in the country. By investing heavily, and helping to attract strong partners to the region, this is a company that is confident about Namibia’s prospects.
WWW.NAMCOR.COM.NA
www.enterprise-africa.net / 7
Published by CMB Media Group Chris Bolderstone – General Manager E. chris@cmb-media.co.uk Rouen House, Rouen Rd, Norwich NR1 1RB T. +44 (0) 1603 855 161 E. info@cmb-media.co.uk www.cmb-media.co.uk CMB Media Group does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher. Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. Š CMB Media Group Ltd 2019
AS FEAT UR ED IN
ENTERPRISE AFRICA
SEPT EMBER 2019