BoN researching economic impact of oil of gas


The Bank of Namibia is conducting research on the potential implications for the macro economy and the potential implications for exchange rate and monetary policy by the production of oil and gas.

Governor Johannes ǃGawaxab said this week that the central bank is also studying the impact of oil and gas on the management of the Welwitschia Sovereign Wealth Fund. The Fund now stands at N$425 million.

Namibia is yet to start oil and gas production but exploration activities has so far contributed positively to economic growth.

ǃGawaxab said the contribution expected to keep rising as explorations intensify and development of oil and gas and green hydrogen takes place.

He said oil and gas could potentially also have implications for monetary policy going forward through increasing natural resource exports that can result in currency appreciation.

He said the oil and gas has the potential to encourage imports and at the same discourage exports in other sectors as they become less competitive.

One of the biggest green hydrogen initiatives is the US$10 billion initiative started in 2021 after Hyphen Hydrogen Energy was announced as the preferred bidder for the country’s first green hydrogen project following a competitive bidding process. The government is set to acquire 24% stake in the project.

The project aims to develop three hydrogen valleys in the southern region, the central region and the northern region. Lüderitz is expected to be the base of the large-scale infrastructure project.

In terms of oil discoveries in the Orange Basin there is an estimated 11 billion barrels with most onshore activity to be concentrated in Lüderitz.

In 2022, Shell announced oil discovery in Graff-1. Since then, Shell has made four discoveries, Jonker-1, La Rona-1, and Lesedi-1 and is currently conducting appraisal work on PEL-39 to determine the commercial viability of the hydrocarbon. The final investment decision is around 2026.

Total Energies has made two discoveries Venus-1 and Mangeti-1 with the final investment decision on Venus well is expected between in 2025 and first oil should be around 2030.

In January this year, Galp Energy announced a discovery, Mopane-1. Total Energy committed 50% of its 2023 exploration budget to appraise its Venus discovery, located 350km from Lüderitz. The Kudu Gas Field is earmarked to feed a 420MW power plant south of Lüderitz.

ǃGawaxab said Foreign Direct Investment (FDI) in oil and gas reached N$33.4 billion between 2021 and 2023. Namibia expected to be among top 15 oil producers by 2035, he said.

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