Government to fund Kudu gas upstream

02 Nov 2014 11:00am
BEIJING, 02 NOV (NAMPA) - The Namibian Government has announced that it will avail money to fund the 44 per cent owned by the National Petroleum Corporation of Namibia (Namcor) in the Kudu gas-to-power project.
It was not immediately known how much Government will avail, but Minister of Mines and Energy Isak Katali told Nampa on Friday Finance Minister Saara Kuugongelwa-Amadhila indicated last week that Government will avail money to help Namcor maintain its shareholding in the project.
Namcor owns 44 per cent of shareholding in the Kudu gas project's upstream, while 46 per cent 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The announcement of Government funding the Kudu gas upstream comes at the right time as Tullow has withdrawn its participation from the much-anticipated project.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 per cent of the shareholding in the project as upstream partners.
Katali told this news agency 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 Namibian Government has already approached the China-Africa Development (CAD) Fund and its potential partner, CNOOC to take up the 46 per cent shareholding.
He said the two companies are eager to take up the shares in the development of the Kudu gas-to-power project.
Katali met with the management of the two companies in Beijing, China on Thursday.
During the meeting, CAD Fund president Liu Hao indicated their willingness to participate.
“Give us time to get answers for the questions we will forward to you as soon as possible. There is no doubt that together we can develop Kudu gas,” said Liu.
The minister told the investors to work on their questions as soon as possible to allow the Namibian government to respond immediately.
“Time is not on our side as we want the project to get off the ground as soon as possible,” he said.
The Kudu Power Station is expected to come on stream in 2018.
Namcor has 44 per cent equity interest in Production Licence 003, along with partners Tullow Kudu Limited (46 per cent operator) and CIECO Namibia (10 per cent).
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 per cent 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)
MMT/AS