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Wednesday 24 April 2019
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Namibia and Angola’s futile oil deal

screen-shot-2016-10-07-at-1-14-25-pm screen-shot-2016-10-07-at-1-14-35-pmNamibia and Angola’s state oil companies have failed to reap any benefits from the agreement signed in 2013 through which Angola was supposed to supply Namibia with crude oil. The agreement was a result of a visit by the Ministry of Mines and Energy with their Angolan counterparts in 2013 to discuss cooperation on crude oil supply and the construction of an oil storage terminal along the Namibia/Angolan border. The two parties considered it a possibility for Namibia to procure oil from oil-rich Angola, taking into account the current trading procedures.  Namcor and Sonangol E.P. (Portuguese: Sociedade Nacional de Combustíveis de Angola, E.P.) were supposed to execute the agreement although Namcor at the time, under the stewardship of the incumbent mines minister Obeth Kandjoze had some reservations over some of the terms in the agreement.

While unveiling the Namcor board this week, Kandjoze said the intention to get crude oil from Angola was a good one considering the long-standing bilateral ties between Angola and Namibia. He however pointed out that there were several differences during the negotiatons that led to the formulation of the agreement. “After several meetings were conducted, the next step was for Sonangol and Namcor to takeover the relationship but it never saw the light of day. But that is the nature of negotiations when dealing with our northern neighbors,” he lamented. “Times were different back then and geo-politics as well. If the agreement is to be renewed, one has to see if the same conditions that necessitated the entering into this agreement exist today or not. Will the current conditions warrant that we renew the agreement under the same terms? For now it is hard to give you an answer to that effect,” he said when asked whether Namibia should pursue the renewal of the agreement under the same terms. Kandjoze said some one of the factors that could hamper the agreement being undertaken again on the same terms include the production cost of a barrel of oil and the price for which it can be sold. “That is one fact that tells you that the same terms and conditions may not be reached in the new agreement[should the agreement be pursued] when considering the pricing difference between sales and production costs. In MoU ‘s of this nature you may or may not find     automatic clauses that say upon lapsing of this agreement if nothing has been achieved it may be automatically extended. I did not have a chance to look at the agreement and I am not fully versed whether that clause is there,” he said. Explaining the difficulties Namcor encountered during the negotiations at the time, Kandjoze said: “The teams that reported back to us on the negotiations had differences on technical elements and it is on that basis that I am saying Namcor had difficulties-it[Namcor] did not object-  in its engagements during the negotiations with Move Consultancy. There were points of significant differences. By the time we were heading into real negotiations, elections came about and I exited,” explained Kandjoze briefly when asked to share the difficulties Namcor had during the negotiations of the agreement.

Angola’s growth prospects are currently in dire straits seeing that it is a single-commodity driven economy and it is now forced to look at ways of diversifying its economy. With the agreement having expired, Kandjoze did not get drawn into whether it should be renewed or not. Kandjoze said he is not bothered where the country’s petroleum products come from but “as long as the country’s security of supply is met.” Despite sharing close political ties, on the economic front Namibia and Angola’s relations are on the downside, evident from the fact that Namibia never imported oil from Angola-be it crude or refined oil. Kandjoze also spoke at length about the ongoing construction of the oil storage facility at the coast.  “The security of supply of petroleum products is of prime importance for this country and every minister tasked with heading this ministry will have to look at the best way to secure the supply of refined petroleum products. The government has taken the noble step of constructing a new storage facility,” he said.

According to the minister: “Strategically speaking much happens in the supply market, both on the price and availability of products, we[Namibia] have enjoyed a relatively stable period of pump prices with a bit of spike but because of the benefits  of the National Energy Fund, when you have over recoveries you actually try and give back to the consumer.” The Villager reported in 2014 that plans to import crude oil from Angola is at a halt, because the Angolan Government has not given the green light to the Memorandum of Understanding signed in 2013. Immanuel Mulunga Petroleum Commissioner at the time, reportedly confirmed that the two governments signed the MoUs but they do not have the head way to implement what was discussed in the MoU. “We have made several attempts with the Angolan government to implement the MoU but they have not gotten back to us. For now we are just stuck with implementation. We have tried to reach the Angolan government to kick start the process of importing the oil but they (Angola) have still not said anything,” he said at the time.

Namibia could save millions of dollars if the MoU is fully implemented and if it (Namibia) gains full commercial access to Angolan crude oil, since the country would no longer need to import fuel from overseas, as is currently the case. Angola’s government budget is made up of 80% oils sales and it is the third-largest trading partner of the United States in sub-Saharan Africa, largely because of its petroleum exports; 7% of the United States’ oil imports are from Angola.




One thought on “Namibia and Angola’s futile oil deal

  1. Luigi90

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    Reply

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