The Minister of Mines and Energy, Tom Alweendo said the discovery of oil in Namibia will not necessarily make petrol pump prices cheaper.
Alweendo said this in a ministerial statement in the National Assembly yesterday to answer to frequently asked questions coming with an oil discovery in a country.
The minister said another obvious question that follows this is, would it be cheaper if we were to invest in a refinery to process the crude locally.
With the skyrocketing prices currently experienced, Namibians are looking for cheaper alternatives suggesting that the country imports from Angola, where refined fuel is cheaper. However, Angolan fuel is said not to be compatible with Namibian vehicles as its specifications differ.
Crude oil prices have increased by 41 percent since the beginning of this year and is expected to continue rising at the back of the war in Ukraine and the sanctions against Russia.
He said the price of fuel will depend on a number of factors such as the cost to extract the crude and the cost to refine.
”In our case, given that this will be deep water extraction, the extraction cost is likely to be much higher than in some other jurisdictions. This is however not a sufficient reason not to invest in a local refinery. It will all depend on the economics of such an investment and an assessment of that will be made at an appropriate time,” Alweendo expanded.
He commended Shell, Total Energies and Qatar Energy for deciding against the international tide against hydrocarbons, and decided to also start with its drilling campaigns at a time when due to Covid-19 pandemic and logistical arrangements were rather challenging.
”I want to assure the investors that they have not made a mistake to invest with us and that we are and will continue to be a great investment destination.”
The discovery, Alweendo said, has provided Namibia with additional super bricks to build and realise the Namibian house.
He cautioned the nation to be patient, saying the discovery does not mean production of crude tomorrow, as there is still a lot of analytical work to be done before the construction of the platform to extract the oil.
The impact of the oil discovery is what we decide it to be – whether it will be a curse or a blessing. ”For it to be a blessing hinges mostly on our policy environment, especially our instutional and political aspects of it. It has been proven that a country with strong institutions, a stable political system and an effective legal framework were able to manage their oil revenue with a positive impact on the economy and for the benefit of their citizens,” emphasized Alweendo.