Energy transition challenges might hamper economic development

Niël Terblanché

Namibia is currently grappling with the complex dynamics of the global energy transition, as its substantial oil reserves beckon investors while international pressure mounts for renewable energy adoption.

Namibia’s Petroleum Commissioner, Maggy Shino, emphasized the importance of winning the “energy transition war” during a committee meeting. She noted that unless Namibia can construct a compelling narrative to navigate the energy transition, its oil resources may remain untapped due to international calls for renewable energy adoption.

Shino explained that the energy transition agenda encourages developing countries to preserve their oil reserves and rely solely on renewable energy sources. This poses a significant challenge for countries like Namibia, which possess valuable hydrocarbon resources.

Tom Alweendo, Namibia’s Minister of Mines and Energy, acknowledged the urgency of the situation. He pointed out that during COP26, many financial institutions announced their intentions to divest from hydrocarbons. Alweendo stressed the need for swift action, as the window of opportunity is beginning to close.

The discussion also touched on the idea of Namibia increasing its stake in oil and gas exploration licenses, typically held at ten percent. However, Alweendo cautioned that any such move must not discourage foreign investors.

Shino highlighted the discoveries made in the Orange Basin, including the Kudu gas field, where production is scheduled to commence in 2026. This project involves an onshore pipeline and a power plant in Luderitz, which will supply 250 MW of power to Namibia and allow the export of 600 MW to South Africa. Plans for a green hydrogen plant in Luderitz are also in progress, and the onshore natural gas presence will enable the production of blue hydrogen for global export.

In terms of oil discoveries, Namibia has seen substantial potential. Shell’s Graff discovery is estimated to contain 100 – 200 million barrels of light oil, while Jonker is expected to hold 250 – 300 million barrels. TotalEnergies’ Venus discovery could potentially surpass one billion barrels of oil. However, these discoveries are located far offshore, with some of them being the deepest-water production sites globally.

Shino cautioned that while Kudu has been fully appraised, Venus and Graff have not undergone this process yet.

She indicated that four drilling rigs are currently working to determine the extent of these fields and their commercial viability, with results expected within the next eight to twelve months.

The situation presents Namibia with both an opportunity and a challenge as it balances its rich hydrocarbon potential with the global shift towards renewable energy sources

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