South Africa, Zambia eye Namibian gas

Windhoek ‑ South African and Zambian power companies plan to acquire stakes in a power station in Namibia, which will be powered by the Kudu Gas Project.
Namibia’s state-owned power company, NamPower, confirmed this past week that it is in talks with Eskom of South Africa and the Copperbelt Energy Corporation (CEC) of Zambia for them to be secondary off-takers of the gas power station.
Kudu Gas is an offshore gas field in Namibia, approximately 170 kilometres north-west from the diamond-mining city of Oranjemund. It was discovered in 1974.Current focus is on defining the Kudu gas field development, which could be followed by further exploration in the licence area for additional gas, and potentially oil resources.
NamPower and the state oil company, National Petroleum Corporation of Namibia (NamCor), announced this week that they had signed the Power Project Development Agreement (PDA).
The two companies said the PDA brings together the upstream (offshore development) and the downstream (power station development) to ensure that each aspect proceeds through engineering and design to a final investment decision in a co-ordinated manner.
The PDA also includes Gas Sales Agreement (GSA) heads of terms and provides the basis for further commercial negotiations pertaining to a final sales agreement.
“On signing the PDA, the upstream partners issued invitations to tender for both sub-sea facilities and the floating production system and awarded a contract for an offshore survey of the field area and pipeline route.
“The work will result in a refined cost estimate for the project, which is critical information to enable all stakeholders to make a final investment decision,” NamCor and NamPower said in a joint statement.
NamPower has already issued the pre-qualification tender for the engineering, procurement and construction of the 800MW Kudu Power Station, with the tender negotiations with the successful bidder expected to be finalised towards the end of 2013.
“Power Export Agreement negotiations with secondary off-takers, namely Eskom and the Copperbelt Energy Corporation (CEC) of Zambia are still on-going.
“CEC has started Joint Development Agreement negotiations with NamPower for possible equity participation in the Kudu Power Station, in addition to its intent to off-take power from the Kudu Power Station,” the statement said.
The Kudu Power Station is expected to come on stream in 2017.
NamPower and NamCor said they would encourage Namibian sub-contractors to take advantage of the various opportunities that the project will be offering through the provision of goods and services particularly during the three years construction period of the gas field infrastructure and the power station.
NamCor has 54 percent equity interest in the production licence of the Kudu Gas Project, together with partners Tullow Kudu Limited (31 percent and the operator) and CIECO Namibia (15 percent). CIECO is made up of Japanese oil companies, Itochu and Jogmec.
NamPower currently holds a 100 percent equity interest in Kudu Power Company, a company established to design, build and own the Kudu Power Station at Uubvlei, 25 km north of Oranjemund.
The power utility intends to reduce its equity in Kudu Power with the introduction of strategic partners.
It will be the sole buyer of electricity from Kudu Power and will enter into power export agreements for the sale of electricity that is surplus to Namibian requirements.


April 2013
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