Energy in Africa


Namibia fast-tracks Kudu development

Published: 10-FEB-05

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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