Nam in bid to return to petroleum market

 

Windhoek ‑ Namibia plans to construct a bulk fuel storage facility, offloading jetty and a pipeline linking the two facilities next year, in an effort to ensure that the country has security of supply.

The bulk storage facility would have capacity to hold 80 million litres of petroleum and will be situated at Walvis Bay port, about 311 kilometres from Namibia’s capital, Windhoek, Obeth Kandjoze, managing director of National Petroleum Corp of Namibia has told The Southern Times.

The government would finance the construction of the storage facility, offloading jetty and pipeline at an estimated cost of R2.5 billion.

Once the facilities are in place, it would provide an opportunity for Namcor, which is owned by the state, to venture into downstream industry of distribution and retail of petroleum products in the entire country, Kandjoze said.

Namcor will present the plan to extend its operations in the entire downstream industry to the board for approval before seeking the nod of the parent ministry, next year.

The petroleum company wants to be involved in import, distribution and retail of petroleum products in the country, Kandjoze said.

Distribution and marketing operations would be stand-alone, profit-making units, the petroleum company says.

Namcor managing director says that the petroleum company can play a role in guaranteeing the security of supply of oil in the country.

“There has been a serious limitation on the issue of storage. The current storage facilities are inadequate, are obsolete and have exceeded their lifespan. Building new storage facilities is critical to security of supply,” Kandjoze says.

Namibia relies on storage facilities of private fuel importers such as Total SA, Engen and Puma Energy, among other private players in the fuel sector.

Constructing own facilities would “reduce dependence on private players” and would allow Namcor “re-entry into the market”.

“We depend on storage from other players in the market, who should be our competitors and once as a country we have our own storage, that dependence is gone. As far as Namcor is concerned, that development will also allow us re-entry into the market,” he said.

Next year, Namcor will initiate a process to seek a fresh government mandate to start importing and distributing 50 percent of Namibia’s petroleum requirements by 2015, Kandjoze said.

The government revoked Namcor’s mandate to import 50 percent of the country’s fuel requirements in 2010.

Namcor plans to rope in a private partner to help invest in retail chains across the country as well as build human capital required to run petroleum businesses, as it seeks to establish a presence in downstream activities, Kandjoze said.

The state-owned petroleum company will gradually take over full control of the businesses once it has built enough capacity to operate them on its own, Kandjoze said.

“We will claw back the operations as we develop that capacity, we will gradually take over as capacity is improved,” he said.

Namcor wants to move away from a situation where it “sits back and takes a commission” from fuel retails.

According to Kandjoze, the withdrawal of some major suppliers from Namibia in recent years presents a business opportunity for Namcor.

“Namcor is the only oil company in this country, which is Namibian owned, and our ambition is to have a Namibian presence in distribution and retail of petroleum and this dovetails the emphasis, at national level, of security of supply,” Kandjoze said.

Kandjoze also revealed that Namcor has shortlisted seven international investors for its 37.8 percent stake in Kudu gas fields and a buyer would have been chosen by March next year.

Namcor is cutting its stake in Kudu gas fields to 16.2 percent, from 54 percent and it hopes to secure an investment partner who will finance the state-owned company’s share of capital in upstream development of the gas fields.

“We have firm expressions of interest from seven companies and we have signed non-disclosure agreements with two of them. We are engaging them by way of information memorandum and hopefully, we will conclude this process by March next year,” Kandjoze said.

Tullow Oil Plc and Itochu Corp own a 31 percent and 15 percent interest, respectively, in Kudu gas fields, situated 200 kilometres off the southern town of Oranjemund.

“We are very confident that we will land a partner,” Kandjoze said.

December 2013
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