Petroleum Upstream

The Ministry of Mines and Energy's White Paper on Energy Policy states that security of energy supply and attracting investment and growth are primary goals in the policy framework. The policy identifies the different roles and functions of industry participants, and lays out the basic legal and fiscal criteria.

The key focus is on creating a policy and legislative framework, which attracts initial investment into the sector, while maintaining options for competition in the future and the fair distribution of economic rents.

Invitation to apply for Onshore / Offshore License Areas

The Government of the Republic of Namibia invites international oil companies to apply for petroleum exploration licenses in Namibia, under the Open Licensing Systemwhich was adopted in 1999. Companies can now apply at any time for acreage

Legal Framework

The legislative framework governing the Namibian upstream oil and gas business is modern and well developed, and has been specially formulated for the international oil industry.

  1. Petroleum (Exploration and Production) Act, 1991 (Act 2 of 1991);
  2. Petroleum Taxation Act, 1991 (Act 3 of 1991);
  3. Petroleum Laws Amendment Act, 1998(Act 24 of 1998); and the
  4. Model Petroleum Agreement(MPA), 2007.

Furthermore, work has commenced on anew Gas Actto prepare Namibia for a downstream gas sector.

Fiscal Framework

The legislation sets out the three mainfiscal elements:

  1. the Royalty (Petroleum (Exploration and Production) Act and Petroleum Laws Amendment Act);
  2. the Petroleum Income Tax (Petroleum (Taxation) Actand Petroleum Laws Amendment Act); and
  3. the Additional Petroleum Tax (Petroleum (Taxation) Act and Petroleum Laws Amendment Act).

As is standard international practice, license application fees, annual license area rental charges and annual training sums are payable in addition to the three main fiscal elements.

The role of the National Oil Company

The National Petroleum Corporation of Namibia's (NAMCOR's) main tasks up to 1998 have been the acquisition of data and the promotion of Namibia's petroleum potential. It also assists the Ministry with the administration of the Petroleum (Exploration and Production) Act.

In the past NAMCOR did not seek a participatory interest in licenses awarded. However, Namibia have now amended its policy such that NAMCOR can participate in licenses if this is offered to the company during negotiations and if NAMCOR decides of its own accord to accept the invitation to participate. NAMCOR's interests will be carried during the exploration phase but it will contribute fully from the development phase onwards. No applicant will be compelled to offer NAMCOR a share in a license and no applicant will therefore be penalised for not making an offer to NAMCOR.