The $800m Kudu gas-to-power project is being hailed as a quick solution to the power demands being experienced by Namibia and the entire southern African region. By Chamwe Kaira in Namibia
Namibia is pushing ahead
with the long-delayed
development of the Kudu
gas fi elds off the Atlantic
Ocean, with the government placing
it as one of the national priorities this
year. The government has appointed
a high-level team, headed by Prime
Minister Theo Ben Gurirab, to oversee
the development of the project.
The fields were discovered 31 years
ago but have never been developed.
However, the growing need for electricity
in southern Africa has sharpened the
focus on the project. The project
suffered major setbacks in the past
three years after Shell International
and Chevron Texaco pulled out,
saying the proven gas reserves did not
warrant the development of a large-scale
international operation.
Nonetheless, Namibian and
South
African energy companies have shown
keen interest to develop the project with
their own resources. Both Namibia and
South Africa are anticipating power
shortages in the next few years, following
an increase in demand, and Kudu is
being seen as one of the solutions.
South Africa is expected to run
out of electricity generation capacity
by the end of the decade. Last year,
Namibia�s power consumption grew
by nearly 9%, excluding new demand
from Anglo American�s Skorpion mine
and smelter complex in the south of
Namibia, which added another 15% to the rate of growth.
In the last quarter of 2004, the first
steps were taken to develop the project.
Namibian authorities say there was a
good response to a tender put out by
state-owned power utility NamPower
year for the construction of a power
station that will generate power from
the Kudu gas fields.
The proven gas reserves of 1,3
trillion cubic feet would be sufficient
to fuel the planned
800MW power
station for the next 22 years. Kudu�s
total reserves are estimated at 3,3 trillion
cubic feet.
The plant will be connected to the
Namibian and South African power
grids, and power from the plant will be
purchased under the long-term Power
Purchase Agreement signed last year
by NamPower and Eskom of South
Africa. NamPower also signed a Joint
Development Agreement with Energy
Africa and Namibia�s state-owned
petroleum company, NamCor.
The planned power station has brought
much optimism: �It is huge,� says Margaret
van der Merwe, the project leader of the
Kudu Gas project at NamPower. She says
the company that will be awarded the
contract for the power plant will not only
be expected to build the station, but also
to oversee its operations. Authorities say
the first gas will be delivered to clients by
October 2009.
Work on all four components
of a detailed feasibility study is
underway, following the signing of
a joint
development agreement last
year. An environmental assessment
and environmental management plan
conducted to World Bank-approved
standards have been completed, while
the technical, commercial and fi nancial
studies are scheduled for readiness
during the first quarter of this year.
The macro-economic impact the
project will have on both Namibia�s
industrialisation process and its export
earnings has also been carefully
considered.
Kudu�s development has also been
boosted by keen interest in the project
by the new owners of Energy Africa,
Irish-based Tullow Oil Plc. Tullow took
over Energy Africa last year at a cost of
US$500m � and Energy Africa has a
90% stake in the Kudu gas project. The
other 10% is owned by NamCor.
The Kudu project fits the Tullow
project prof ile in the North Sea,
Pakistan and onshore in the United
Kingdom. Energy Africa has operations
in Congo, Egypt, Gabon, Mauritania
and Senegal. Tullow has operations
in Gabon, Cameroon
and the Ivory
Coast.
Namibia�s intentions to develop
the Kudu fields have been underlined
by the recent announcement that the
Epupa Hydropower scheme on the
border with Angola has given way to
the development of the Kudu gas-topower
project.
This is notable because since
independence in 1990, Epupa was seen
as the main solution to the power crisis
facing not only Namibia, but the whole
southern African region.
�We view it as essential not only
that Kudu proceeds in the interests of
security of national supply and industrial
development; but also that it proceeds
in a manner that inspires continued
and indeed increased international
confi dence in Namibia,� says NamPower
Managing Director Leake Hangala in
the company�s latest annual report.
Hangala says the Kudu project
will permanently alter Namibia�s
historical power import dependency
and, among numerous other benefi ts,
provide a platform for development of
new,
energy-intensive industries in the
country. Namibia currently imports
more than half of its electricity from
Eskom.
NamPower�s sources of electricity
at the moment include a coal-fi red
thermal power station in Windhoek
with 120MW installed capacity, a dieselpowered
station at Walvis Bay (24MW)
and a hydro-electric power station at
Ruacana with a 249MW capacity, giving
the utility a total installed generation
capacity of 393MW.
Demand is growing at a fast rate and
energy experts say by 2007 the region
will face great diffi culty in servicing
peak demand for electricity. According
to Hangala, no one country can tackle
the regional challenge single handedly.
He believes that the optimal solution
can only be found through regional
cooperation and joint planning efforts.
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