SNC Incorporated Managing Partner, Shakwa Nyambe delivered a presentation, titled “Namibia: Africa’s New Oil & Gas Frontier; A Scrutiny of the Business & Legal Aspects” at the recently concluded Africa Energies Summit 2024 in London, UK. In his address to international leaders and industry professionals at the Summit, Nyambe explored Namibia’s evolving energy mix and examined recent significant deals within the nation’s petroleum sector. His presentation covered.
Namibia’s Energy Landscape
Nyambe provided an in-depth analysis of Namibia’s current energy strategies, applauding the country’s commitment to developing a diversified energy portfolio. In light of the global calls for energy transition, Namibia is sticking to an energy mix approach as set out in its National Policy of 2007, where it promotes the efficient use of all forms of energy, it ensures the security of all relevant energy supplies to the country, and it incentivizes the discovery, development and productive use of the country’s diverse energy resources and promote all forms of energy sources as they are.
He highlighted the ongoing reviews of Namibia’s petroleum legal framework, which are necessary for creating a conducive environment for investment and growth in the energy sector. He discussed the potential detailed Petroleum Exploration & Production Regulations that are being considered, which will cover development plan, work programmes, drilling operations, surveys and others. He also discussed the potential amendments for the fiscal terms concerning the petroleum sector, especially with the first oil production expected towards the end of the decade. Some other amendments include a review for acreage fees and licence fees.
Nyambe also highlighted that the Petroleum Act in its current form does not have specific provisions for the development of natural gas fields, this is more definitively covered in the Model Petroleum Agreement. As a potential gas producing region and in view of the of gas operations, The Model Petroleum Agreement also ought to undergo reviews and amendments, however he advised that it would be beneficial to legislate some of the provisions for the development of gas fields rather than leave these to be fully negotiated under a contractual regime.
While discussing potential review of the Model Petroleum Agreement, Nyambe also discussed the need to include stabilisation clauses in the Petroleum Agreement, this will greatly increase investor confidence and security for international companies and investors, shielding them from political risk and adverse legislative changes, which are often common in developing countries. Stabilisation clauses also interact with other investment law concepts like fair and equitable treatment, full protection and security, and expropriation, all of which can be included in Model Petroleum Agreements.
His presentation also covered the importance of local content in Namibia’s petroleum industry. He stressed the need for a clear and stable regulatory framework to support local content requirements. This framework should identify specific sectors for developing local capacity, maximize employment and development opportunities for Namibians, enhance local supplier participation across the value chain, and promote Namibian ownership and financing at all levels of the industry.
He further emphasized the need for comprehensive industrial baseline surveys and vocational skills studies to pinpoint areas where the petroleum industry could most benefit and have a positive impact on the lives of Namibians. This includes drafting a regulatory framework through consultations with relevant stakeholders to strengthen local content and capacity development.
Consideration for Licence Bid Rounds for Transparency & Accountability
Nyambe also explained Namibia’s current licencing regime, which currently uses an open licencing system, where companies submit applications to acquire exploration and production rights for licences on a first come basis.
To further enhance the transparency and accountability of the licensing process in the Namibian Petroleum Sector, Nyambe emphasized the need for the country to introduce license bid rounds for some of the acreage. These rounds would involve periodic and publicly announced opportunities for companies to bid for licenses. This system allows the government to assess the financial and technical capabilities of potential investors, ensuring that only qualified and capable entities are granted licences. The process would be highly structured and regulated, with clear criteria and timelines, making it more difficult for unethical practices.
In addition to implementing license bid rounds, Namibia should also consider maintaining an open licensing system for some acreages. An open licensing system allows companies to apply for licenses at any time, rather than waiting for specific bid rounds. This flexibility can be beneficial for attracting continuous investment and for areas that may not attract significant interest during structured bid rounds.
The integration of license bid rounds with open licensing can significantly enhance both transparency and accountability by reduce the risk of unethical practicesand ensuring that those managing the resources are held accountable.
Independent Upstream Oil and Gas Regulator
Nyambe also recommended the establishment of an independent regulator for the upstream oil and gas sector. The establishment of an independent upstream oil and gas regulator would greatly benefit the country as it would ensure impartiality and transparency in decision-making processes, thereby reducing the potential for conflicts of interest or direct political interference.
An upstream regulator will oversee the licensing and permitting process for oil and gas exploration and production activities. These will include evaluating applications, setting criteria for qualification and granting licenses. An independent upstream oil and gas regulator will also carry out other functions which will include monitoring petroleum activities, technical and safety, compliance with laws, environmental protection and issue guidelines or notices.
Nyambe also emphasised the importance of an independent upstream regulator in assessing and promoting local content development within the Petroleum industry, this will be done by setting minimum requirements for local participation, job creation and capacity building for international companies operating in the sector and ensuring that companies adhere and uphold those requirements. The regulator can facilitate skills transfer, technology transfer and the development of local businesses.
Nyambe emphasised the important role of an independent regulator in maintaining a fair and level playing field within the regulated industry. It ensures that all participants adhere to the established regulations and compete onequal terms, preventing monopolistic practices or unfair advantages.
Having an effective legal and regulatory framework is crucial for the proper development of Namibia’s petroleum resources. An effective legal and regulatory framework needs to follow and consider the best practices in the industry and deal with potential risks such as corruption, health and safety, environmental degradation, the non-sustainable exploration of hydrocarbons, expropriation, and to consider the different stakeholders, such as indigenous people, local communities, local government. An effective legal and regulatory framework will also ensure that a competent independent authority is established with public powers to provide oversight, regulate the industry and implement government policy.
Such a regulator should operate independently of the policy-making process, which remains the prerogative of the government and legislature. The role of this regulator would be to administer regulations derived from established policies, ensuring transparency and efficiency in the sector.
Market Opportunities and Strategic Insights
During his discussion on the recent developments in the Namibian Petroleum Sector, particularly in the Walvis and Lüderitz Basins, there are significant market opportunities for investors.
Nyambe discussed the recent M&A that have taken place in the Sector. The sector is poised for a substantial increase in Mergers & Acquisitions (M&A) driven by recent discoveries.
The derisking of the Walvis Basin has spurred a rise in exploration and production activities, leading to a demand for wells to be drilled. This surge in activity creates lucrative opportunities for service and drilling companies to expand their operations and cater to the growing needs of the industry.
Business Considerations in Namibia’s Oil & Gas Sector
In addition to legal frameworks, Nyambe addressed critical business considerations for entities operating in Namibia’s oil and gas sector. He detailed the tax obligations and considerations that come with operating in Namibia’s energy sector, employment and labour issues such as basic conditions of employment, ordinary working hours, and the rights and duties of employers and employees.
He also touched on the procedures for corporate formations and registrations, explaining the different types of business entities recognised in Namibia. This segment provided essential insights for international companies looking to establish a presence in the Namibian market.
The presentation of Shakwa Nyambe at the Africa Energies Summit 2024 reinforced his position as a leading legal and business advisor in the energy sector, particularly in Namibia’s burgeoning oil and gas industry. The insights shared by Nyambe have set the stage for engaging discussions on improving Namibia’s legal and business environment to attract significant investment and advance sustainable development in the oil and gas industry.
About SNC Incorporated
SNC Incorporated is a full-service energy, natural resources, commercial and dispute resolution law firm with offices in Windhoek, Namibia. Equipped with international exposure and local knowledge of the laws in Namibia, Southern Africa and the rest of Africa, it is uniquely placed to advise international corporations, private companies, governments, indigenous African companies, state-owned enterprises and non-government organisations doing business in Namibia and the rest of Africa. SNC Incorporated is ranked highly and recognized by global institutions such IFLR100, Chambers and Partners, Global Law Experts and The Lawyer Network.
About Shakwa Nyambe
Shakwa Nyambe is the Managing Partner of the law firm SNC Incorporated, with offices in Windhoek, Namibia. He is specialised in Energy, Natural Resources and Commercial Lawyer. He is also specialised in drafting, reviewing, and negotiations of contracts. He has advised International Corporations, Private corporations, State-Owned Enterprises and individuals in Oil & Gas projects, Renewable Energy projects, Mining projects, Natural Resources, Mergers and Acquisitions, Commercial Transactions, Corporate governance, and Project financing as well as rendering advisory services on general commercial and dispute resolution matters. His clients include some of the oil and gas companies, renewable energy companies, mining companies, construction and infrastructure companies, State-Owned Enterprises, and corporate entities.