Govt to Fund Kudu Gas Upstream

The government has announced that it will make available money to fund the 44% owned by the National Petroleum Corporation of Namibia (Namcor) in the Kudu gas-to-power project.

Minister of Mines and Energy Isak Katali told Nampa that Finance Minister Saara Kuugongelwa-Amadhila has indicated that government will provide money to help Namcor maintain its shareholding in the project.

Namcor owns 44% of shareholding in the Kudu gas project’s upstream, while 46% is owned by Japanese companies Itochu Corporation and Tullow Oil.

“Government’s participation and funding of this portion will make the project more attractive for investors,” he said.

The Kudu gas-to-power project is set to increase power production in Namibia.

The announcement of government funding the Kudu gas upstream comes at the right time as Tullow has withdrawn its participation from the much-anticipated project.

Tullow and Itochu jointly owned 46% of the shareholding in the project as upstream partners.

Katali said Tullow has however informed government that it will withdraw from the project as the company is experiencing financial problems.

The minister said it is anticipated that Itochu will follow suit as they owned the same amount of shares.

“Tullow has indicated that they can only continue with the project up to the final investment decision,” he said.

However, Katali indicated that the government has already approached the China-Africa Development (CAD) Fund and its potential partner, CNOOC to take up the 46% shareholding.

He said the two companies are eager to take up the shares in the development of the Kudu gas-to-power project.

Namcor has 44% equity interest in Production Licence 003, along with partners Tullow Kudu Limited (46% operator) and CIECO Namibia (10%).

The Kudu gas field is located some 130 kilometres offshore the south-west coast of Namibia.

The 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 currently holds 100% equity interest in the Kudu Power Company (Proprietary) Limited, the company established to design, build and own the Kudu Power Station at Uubvlei, 25 kilometres north of Oranjemund.

NamPower intends to reduce its equity in Kudu Power with the introduction of strategic partners, who will be the sole buyers of electricity from Kudu Power and will enter into power export agreements for the sale of electricity that is surplus to Namibian requirements.

The main elements of that project are the development of the Kudu gas field and the construction of an 800 megawatt (MW) combined cycle natural gas-fired power station near Oranjemund in southern Namibia.

When completed, this power station will feed the Namibian, Zambian and South African power grids.

NamPower will take up 400 MW to be consumed in the country, while 100 MW will go to South Africa and Zambia will take up 300 MW. – Nampa

Source : The Namibian