12 Show Interest in Kudu
Windhoek – Namibia’s National Petroleum Corporation says 12 companies have expressed interest in taking Tullow Oil Plc’s 31 percent equity as well as operators’ licence in Kudu Gas project, an estimated 1.4 trillion cubic feet gas field, which Namibia wants to pump to fire a planned power plant by 2018.
“There has been enormous interest in the project from all over the investment community. We are processing information from 12 companies, which have expressed interest so far and setting up dates for meetings,” Obeth Kandjoze, Managing Director for Namcor, said in an interview.
Namibia is scrambling to secure investors for the Kudu stake, after Tullow said it is pulling out to focus on bigger projects elsewhere. Gas from the Kudu field would be pumped to a planned 1 050 megawatt gas-to-power plant by 2018.
The planned gas-to-power plant’s supplies are critical to Namibia, which imports 60 percent of its power in a typical year, and up to 80 percent during the dry season when water levels in Ruacana, at which key hydropower plant is located, drop.
Namcor, which owns a 54 percent stake in the US$2 billion Kudu project, is seeing “firm interest from FlowStream Commodities to work towards an agreement” regarding the 31 percent equity stake, Kandjoze said. “There is quite serious interest from FlowStream, we just have to work out the nitty-gritties,” Kandjoze said.
The Namibian government is finalising a financing package to back up Namcor’s 44 percent stake and share of capital in the Kudu project and could also provide guarantees on raising financing, Kahijoro Kahuure, Permanent Secretary in Mines and Energy Ministry said.
Kudu is a “complex project” but a partner has to be found before June 2015 and the project is deemed of “strategic national importance”, Kahuure said. “The Kudu project remains a strategic project for Namibia and one which will continue to be supported by the government of Namibia, there is no other project that can deliver electricity by 2018 and this is the project that the country need to support to make sure that we don’t have power cuts and load shedding by 2018 as is the case with some neighbours,” Kahuure said.
“We are aware of the fact that Kudu has always been a complex project with many critical issues that need to be addressed at the same time to enable the project to attract the necessary funding but we do not believe that the outstanding issues are insurmountable,” Kahuure said.
“The upstream and downstream partners are continuing to work with government on the equity and funding structure of the project as well as other outstanding critical success factors,” he added.
International Finance Corporation has agreed to finance Namcor’s remaining 10 percent stake in Kudu. “IFC’s provision is for upfront financing against future earnings. We have secured tax concessions from Inland Revenue that the money IFC brings into the project is not tax liable,” Kandjoze said.
The Kudu fields, 200 kilometres offshore of the southern town of Oranjemund, hold an estimated 1.4 trillion cubic feet of gas. Namibia Power Corp, which is the sole off taker of the gas pumped from the Kudu fields, appointed Shanghai Electric Group Co. to construct the gas-fired power and Siemens AG to supply its equipment, it said in September.
Namcor could take up more equity in the gas field, should Japan’s Itochu Corp, decides to sell its 15 percent stake in the project, Kandjoze said. “Itochu has not announced its decision, we have asked them to state their position,” Kandjoze said.
“If there is additional equity, the remaining partners will split it proportionally and if it means its only Namcor remaining, of course, we will have to find ways to develop the project ourselves,” Kandjoze said.