To ensure that petroleum resources are exploited optimally and responsibly, the government of Namibia has considered several oil and gas management principles (or oil commandments as one may call them) to be ideal for the development of a national petroleum policy.
According to Deputy Minister of Mines and Energy, Kornelia Shilunga, government has envisaged twelve pillars to be the foundational principles of its national oil and gas policy.
The pillars include that the effective stewardship of oil and gas resources should be prioritized at all levels of petroleum activities in Namibia, the discovered oil and gas should be exploited in such a manner to make Namibia energy independent, upstream oil and gas sector should be leveraged to fast-track industrialization, economic diversification and job creation through active participation of all Namibians in the sector’s value chain, that the conservation of oil and gas resources should be prioritized by requiring petroleum license holders to reduce economic waste through optimum exploration strategy and depletion rate and that Namibia should strive to ensure that oil and gas production does not distort our country’s economy.
Further “commandments” are that local value creation should be prioritized by ensuring that produced oil and gas is processed in Namibia as much as it is operationally and economically possible, that the conservation of the social and natural environment should be prioritized in all oil and gas activities, that flaring of natural gas outside operational necessity should be prohibited in line with our existing petroleum legislation and that onshore processing of natural gas should be prioritized to facilitate the long-term development of midstream and downstream industries.
The last set of principles are that the state through state entities such as NAMCOR and Namport should actively participate in the development of critical common use oil and gas infrastructures, that national oil company (NAMCOR) should safeguard the State’s commercial interest in all oil and gas activities and that oil and gas revenues should be managed to improve the living standard of both current and future generation of Namibians.
“We are fully aware that the emerging petroleum industry will bring not only transformational opportunities but also challenges. There are many examples around the world whereby oil and gas exploitation have negative socio-economic and political impacts. Therefore, we should not take the resources curse lightly and we must learn from others’ experiences. Now, good governance of our petroleum sector requires all of us to play our respective roles. From the Government perspective, it entails that we should have clear national goals to ensure sustainable exploitation of our country’s oil and gas resources,” Shilunga said last week.
Hindsight of this Shilunga went on to say that international oil companies and oil service companies shall have to play a key role to ensure local prosperity.
“As we embark upon this critical journey towards common prosperity from the Namibian oil and gas industry, we expect the international oil companies, both petroleum license holders and service providers to play a critical role. To achieve local prosperity from oil and gas exploitation, it is imperative that oil industry players contribute to capacity building of Namibians and procure their goods and services from local suppliers as much as possible.
“With regards to capacity building, we expect that oil companies recruit talented Namibians to ensure that meaningful skills and knowledge is transferred. Disappointingly, I have learnt that some oil industry players are merely fronting Namibians in positions, and some are even reluctant to employ Namibians. I particularly would like to say that the government expects all our oil industry players to be transparent and fair in their recruitment processes. Ideally, all vacant positions should be advertised in local media to ensure that Namibians who meets minimum requirements from all corners of the country have equal employment opportunity,” she said adding that it is a known fact that a large portion of in country value creation in the oil industry comes through the supply chains.
“However, we are still in the process of developing our Local Content Policy. Despite this, it must be noted that our existing petroleum legislation has local content provisions. Specifically, oil industry players should procure Namibian goods and services. Therefore, while we are finalizing our Local Content Policy, we expect all oil industry players to comply with these provisions. Our Local Content Policy will just fortify the existing local content provisions. The aim is not only to align our Local Content Policy with international best practices but also to deliver more business and more jobs for our people. In the meantime, the oil industry players should ensure local prosperity through compliance, transparency, equity and mutual interest.”