Namibia's Petroleum Industry Heats Up With New Oil Discovery And Investment Opportunities

• Published date: 20 March 2023
• Subject Matter: Energy and Natural Resources, Energy Law, Oil, Gas & Electricity
• Law Firm: ENSafrica
• Author: Mr Rewaldo Quest and Stefanie Busch

Namibia's petroleum industry heats up with new oil discovery and investment opportunities

Yesterday's announcement of the third oil discovery made in the offshore orange basin by Shell Namibia, Qatar Energy, and Total Energies brought Namibia's petroleum industry back into the limelight.

As a result of the recent successful oil discoveries made, we picked up on an influx of international upstream and midstream service providers spurting to Namibia seeking their corporate residence in Namibia's petroleum sector. We continue to watch as potential investors are continuously induced to invest in the exploration or production of petroleum or the provision of auxiliary upstream and midstream services in the country.

Below is an overview of Namibia's petroleum regulatory environment, including licensing requirements and local content considerations.

Types of Licences

If investors desire a slice of the petroleum pie, investors may either register a company in Namibia to apply to the Commissioner for Petroleum Affairs ("Petroleum Commissioner") for a reconnaissance licence, an exploration licence or a production licence to produce petroleum under the Petroleum (Exploration and Production) Act, 1991 or alternatively acquire shares in existing licenced companies.

A reconnaissance licence authorises its holder to search for petroleum by:

• geological, geophysical and photogeological surveys; and
• remote sensing techniques.

The reconnaissance licence is valid for two years and can be renewed for two further periods of two years, subject to the minister's discretion.

An exploration licence authorises its holder to conduct activities such as:

• geological, geophysical, geochemical, palaeontological, aerial magnetic, gravity or seismic surveys;
• the appraisal of such surveys;
• drilling for appraisal purposes; and
• the study of the feasibility of any production operations or development operations.

The exploration licence is valid for four years and can be renewed for two further periods of two years, as may be determined by the minister. A production licence authorises the licensee exclusively to produce, sell or otherwise dispose of petroleum recovered. The production licence is valid for a period not exceeding 25 years and can be renewed for period not exceeding 10, as may be determined by the minister.

So far, Namibia's petroleum sector has granted only two reconnaissance licenses, 31 exploration licenses (with 42 pending applications), and a single production license.

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