International oil giants TotalEnergies and Petrobras have been accused of undermining Namibian law in their bid to purchase an oil licence partly owned by oil tycoon Knowledge Katti’s company.
TotalEnergies and Petrobras announced last Friday that they had acquired a stake in oil block 2613 (petroleum exploration licence (PEL) 104), a move that was termed unlawful by the Ministry of Industries, Mines and Energy without government approval.
Section 9 (1)(b) of the Petroleum (Exploration and Production) Act, 1991 (Act No. 2 of 1991) says that no person can “transfer a licence or grant, cede or assign any interest in a licence to any other person, or be joined as a joint holder of a licence otherwise than in writing and with the approval in writing of the minister.”
PEL104 is owned by Eight Offshore Investment Holdings and Maravilla Oil & Gas, a company founded by Katti, who is also manoeuvring for a stake in PEL87 through Sintana Energy.
Eight will continue to hold a 5% stake in the block, with Maravilla selling off its stake entirely.
“On what basis was this transaction announced as a done deal? TotalEnergies described Namibian regulatory approval as ‘customary’, meaning routine, a formality, a rubber stamp. This is what multinational oil companies think of our sovereignty, and based on this week’s events, can we blame them?” Independent Patriots for Change (IPC) president Panduleni Itula said in a press release on Sunday.
The mines ministry on Sunday voiced concerns that the two international companies had announced the acquisition of the oil block without prior written approval from the minister.
Politicians and civil society have questioned the effect this could have on the integrity of Namibian regulatory processes.
“Namibia cannot allow billion-dollar offshore assets to change hands without the knowledge of the custodian ministry. If international companies can bypass our regulatory framework with impunity, it raises serious questions about sovereign oversight of our petroleum resources,” IPC shadow minister of international relations and trade Rodney Cloete says. Political commentator Ben Mulongeni says international companies need to respect Namibian regulations.
“It’s totally unacceptable, and the law must take its course. These companies must learn their lesson. Sometimes international companies look down on Africa and it is on us as Namibia to educate everyone that we have laws that need to be followed, especially relating to natural resources,” he says.
He says Namibian companies involved in the process must also take responsibility for lawful exploitation of natural resources.
“A Namibian company that bypassed our laws, that’s betraying your own country,” Mulongeni says.
COMPANIES DENY WRONGDOING
TotalEnergies and Petrobras have denied acting unlawfully in their acquisition of PEL104.
“TotalEnergies always respects the laws and processes in the countries where it operates. Completion of the transaction remains subject to customary approvals from the Namibian authorities, including the prior approval of the minister of industries, mines and energy,” TotalEnergies says.
Similarly, Petrobras defended its press statement, saying the transaction had not yet been completed.
“The company reiterates that, as informed at the time, ‘the completion of the transaction is subject to the fulfilment of precedent conditions, including applicable governmental and regulatory approvals, notably from the Ministry of Industries, Mines and Energy of Namibia.’ In this context, Petrobras notes that the transaction remains subject to the relevant approval processes and will proceed in accordance with Namibia’s legislation and regulatory requirements,” Petrobras says.
The ministry in its press release stated that the government should have been notified of the developments.
OIL GOVERNANCE
The acquisition of PEL104 comes during heightened scrutiny of the Namibian oil sector.
Last week minister of mines Modestus Amutse tabled the petroleum amendment act, which will move authority for approving such transactions to the new upstream petroleum unit under the Office of the President.
“TotalEnergies chief executive Patrick Puyanne met president [Netumbo] Nandi-Ndaitwah on 30 January, one week before this announcement. Was PEL104 discussed during that meeting? If the Presidency was informed while the statutory regulator was not, then the legal framework has already been bypassed in practice,” Itula said.
Landless People’s Movement parliamentarian Eneas Emvula says it is highly likely that PEL104 was discussed during that meeting.
“The Presidency should be held accountable. There is no way that an agreement can be entered into without the knowledge of the president, just like any person coming to visit your house cannot enter your gate without your permission,” Emvula says.
The Presidency did not comment on whether PEL104 was discussed during the 30 January meeting.
“The Presidency does not control private companies, nor does it decide when or how they issue commercial statements. It is also difficult to see how the president would bypass her own institutions or established processes. That is not how the system of governance operates,” presidential spokesperson Jonas Mbambo says in response to lawmakers’ comments.
The Presidency reiterated on Sunday that the purchase of the offshore stakes will not be recognised or considered valid until the companies involved follow the proper route for approvals.
“The role of the authorities, as regulator and custodian of Namibia’s natural resources, is to assess applications in accordance with the law, licence obligations, and the national interest. At this stage, therefore, the reported deal cannot be regarded as concluded,” Mbambo said.
According to last Friday’s press releases, TotalEnergies will hold 42.5% of the licence and act as the operator of the block and Petrobras will hold an additional 42.5%. The remaining 10% is held by the National Petroleum Corporation of Namibia.
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