The Ministry of Mines and Energy (MME) met with Angola's Ministry of Petroleum in mid-February to discuss cooperation on crude oil supply and the construction of an oil storage terminal along the Namibia/Angolan border.
The Namibian delegation was led by the Minister of Mines and Energy, Isak Katali, while Jose Maria Botelho de Vasconcelos, Minister of Petroleum, led the Angolan delegation. The two parties considered it a possibility for Namibia to procure oil from oil-rich Angola, taking into account the current trading procedures. While no concrete agreement has been drawn up, the two countries have finalised negotiations on a Memorandum of Understanding (MoU), which is to be signed later this year. Procedurally the agreement will have to be approved by both the Angolan Ministry of Foreign Affairs and the Office of the Attorney General in Namibia.
During a working meeting earlier in February both parties recognised the need to strengthen cooperation in the petroleum sector. In particular, the Namibian delegation expressed its willingness to participate in the second phase construction project of Angola's Lobito refinery, as well as the construction of the Soyo refinery. At the beginning of December last year Angola's state-owned oil company, Sonangol, announced the formal start of construction on the Lobito refinery, along that country's central coastline, with a capacity to process 200 000 barrels of crude oil a day.
The Soyo refinery is situated along the north coast of Angola close to the border with the Democratic Republic of Congo. The two countries also resolved to encourage close cooperation between the national oil companies, Sonangol and Namcor (National Petroleum Corporation of Namibia).
These plans could significantly reduce oil, petrol and diesel prices in Namibia. However, it is currently illegal for Namibians to purchase fuel in Angola as it allows the evasion of payment of key levies, which the MME says could cripple the local economy. Numerous media reports have cited the growing tendency among residents in the northern regions of the country to cross the border into Angola to fill up their vehicles.
This practice was particularly evident during the last festive season when Namibians formed long queues as they scrambled for a chance to enter Angola through the Oshikango Border Post to fill up.
Angola is among the top-two producers of oil in Africa, alongside Nigeria. Until recently, petrol in southern Angola was priced at six kwanzas (N$4.50) per litre, while diesel trades for 40 kwanzas (N$3) per litre. This is in stark contrast to Namibian pump prices of close to N$11 per litre for petrol and just over N$11 for diesel. However, Namibian fuel is comprised of various levies such as the MVA levy, fuel tax and the National Energy Fund levy.
If Namibia does manage to gain full commercial access to Angolan crude oil, the country could save millions of dollars since it would no longer need to import fuel from overseas, as is currently the case. Namibia has since the early 1990s been in talks with Nigeria with a view to setting up an oil refinery at Walvis Bay, but this has not yielded any tangible results to date.
Last year it was reported that one of the world's leading producers of petroleum, Iran, was also considering setting up a refinery in Namibia. During this month's bilateral meeting the MME delegation also informed the Angolans that the Namibian private sector has a monopoly over the downstream supply of fuel and in view of this the government says it is creating workable mechanisms to change the situation.
By Edgar Brandt