Japanese seek to join Kudu project

A JAPANESE company is awaiting Cabinet approval to buy a 20 per cent stake in the offshore Kudu gas field from a British oil company for N$315 million as the international rush for Namibia’s natural resources continues.

A senior representative of Itochu Corporation, Tatsuya Hosokawa, who heads the company’s South African branch, informed Speaker Theo-Ben Gurirab of this during a courtesy call to his office at the National Assembly on Thursday. “The price is N$315 million or 44 million US dollars,” Hosokawa told reporters afterward.”We are waiting for approval from Namibia’s Cabinet.”Asked if the sudden Japanese interest in Namibia’s gas reserves was due to Russia and China’s recent offers to the Namibian Government for developing mining projects such as uranium and possibly copper, Hosokawa merely said: “We want to expand our activities and competition always exists.”The Namibian Petroleum Corporation (Namcor), a State-owned enterprise, has a 10 per cent stake in the N$6 billion Kudu gas field project, which is awaiting investment in order to get off the ground.British oil giant Tullow Oil bought 90 per cent via its subsidiary Energy Africa some three years ago.According to oil industry reports, Tullow wanted to reduce its investment risk by selling 20 per cent of its stake and reducing its ownership in the Kudu gas project from 90 to 70 per cent.The gas field is located 140 kilometres off Oranjemund and it has approximately 1.5 trillion cubic feet (TCF) of gas reserves.Should the deal be signed, Itochu’s purchasing price will pay 40 per cent of the cost of two new test wells to investigate the gas field’s remaining potential.These costs are estimated to be US$110 million.Under the terms of the transaction, Itochu will make further payments depending on the ultimate volume of reserves developed.Itochu has participated in three other gas projects – one in Qatar and two in Oman.According to Hosokawa, the company aims to expand its activities on natural gas development and get involved in natural gas value-chain businesses.The test-drilling programme in the Kudu field will start in May and results are expected before year-end.Itochu expects that the appraisal programme will demonstrate the potential of some five trillion cubic feet of gas reserves, which could lead to another liquefied natural gas (LNG) project development in Namibia.LNG is gas that has been converted into liquid for shipment.Itochu is Japan’s third-largest company, founded in 1858, gradually evolving from pure buying and selling to manufacturing, supplying, exporting and investments.It has 1 027 subsidiaries and associated companies operating in over 80 countries.According to South African media reports, the Kudu drilling programme will be closely watched by South Africa’s state petroleum company PetroSA, which is looking at the option to keep its gas-to-liquid plant in Mossel Bay operational after the year 2013, when gas from production fields off the southern Cape coast is due to run out.Last year Japan’s second-biggest trading company, Mitsui, acquired a 15 per cent interest in offshore oil and gas exploration blocks in Namibia from BHP Billiton for an undisclosed sum.BHP Billiton had signed petroleum exploration agreements with the Ministry of Mines and Energy earlier to search for oil and gas in the Orange Basin.Hosokawa of Itochu Corporation also held meetings with the Ministry of Mines and Energy, the Prime Minister, Namcor, the Ministry of Trade and Industry and NamPower last week.None of these institutions informed local media about the visit of the Japanese investors.The same official silence surrounded the recent visits of two Russian delegations interested in investing in nuclear power generation in Namibia.”We did not want to keep it secret from the media or the public,” an official in the Ministry of Mines and Energy told The Namibian on inquiry yesterday.”We would have made an announcement once everything was finalised,” claimed the official, who spoke on condition of anonymity.Asked whether he was aware that Tullow Oil had already announced Itochu’s offer internationally, and that the information had consequently been available on all major financial Internet sites since last Thursday, the official replied: “We did not think of the Internet.”He declined to comment when asked why Russia’s offer to build nuclear power stations in Namibia was hushed up.”The price is N$315 million or 44 million US dollars,” Hosokawa told reporters afterward.”We are waiting for approval from Namibia’s Cabinet.”Asked if the sudden Japanese interest in Namibia’s gas reserves was due to Russia and China’s recent offers to the Namibian Government for developing mining projects such as uranium and possibly copper, Hosokawa merely said: “We want to expand our activities and competition always exists.”The Namibian Petroleum Corporation (Namcor), a State-owned enterprise, has a 10 per cent stake in the N$6 billion Kudu gas field project, which is awaiting investment in order to get off the ground.British oil giant Tullow Oil bought 90 per cent via its subsidiary Energy Africa some three years ago.According to oil industry reports, Tullow wanted to reduce its investment risk by selling 20 per cent of its stake and reducing its ownership in the Kudu gas project from 90 to 70 per cent.The gas field is located 140 kilometres off Oranjemund and it has approximately 1.5 trillion cubic feet (TCF) of gas reserves.Should the deal be signed, Itochu’s purchasing price will pay 40 per cent of the cost of two new test wells to investigate the gas field’s remaining potential.These costs are estimated to be US$110 million.Under the terms of the transaction, Itochu will make further payments depending on the ultimate volume of reserves developed.Itochu has participated in three other gas projects – one in Qatar and two in Oman.According to Hosokawa, the company aims to expand its activities on natural gas development and get involved in natural gas value-chain businesses.The test-drilling programme in the Kudu field will start in May and results are expected before year-end.Itochu expects that the appraisal programme will demonstrate the potential of some five trillion cubic feet of gas reserves, which could lead to another liquefied natural gas (LNG) project development in Namibia.LNG is gas that has been converted into liquid for shipment.Itochu is Japan’s third-largest company, founded in 1858, gradually evolving from pure buying and selling to manufacturing, supplying, exporting and investments.It has 1 027 subsidiaries and associated companies operating in over 80 countries.According to South African media reports, the Kudu drilling programme will be closely watched by South Africa’s state petroleum company PetroSA, which is looking at the option to keep its gas-to-liquid plant in Mossel Bay operational after the year 2013, when gas from production fields off the southern Cape coast is due to run out.Last year Japan’s second-biggest trading company, Mitsui, acquired a 15 per cent interest in offshore oil and gas exploration blocks in Namibia from BHP Billiton for an undisclosed sum.BHP Billiton had signed petroleum exploration agreements with the Ministry of Mines and Energy earlier to search for oil and gas in the Orange Basin.Hosokawa of Itochu Corporation also held meetings with the Ministry of Mines and Energy, the Prime Minister, Namcor, the Ministry of Trade and Industry and NamPower last week.None of these institutions informed local media about the visit of the Japanese investors.The same official silence surrounded the recent visits of two Russian delegations interested in investing in nuclear power generation in Namibia.”We did not want to keep it secret from the media or the public,” an official in the Ministry of Mines and Energy told The Namibian on inquiry yesterday.”We would have made an announcement once everything was finalised,” claimed the official, who spoke on condition of anonymity.Asked whether he was aware that Tullow Oil had already announced Itochu’s offer internationally, and that the information had consequently been available on all major financial Internet sites since last Thursday, the official replied: “We did not think of the Internet.”He declined to comment when asked why Russia’s offer to build nuclear power stations in Namibia was hushed up.