The Energy Republic February Edition 2022

AFRICAN ENERGY STORIES
E XC L U S I V E I N T E R V I E W
Frank Fannon
Managing Director of Fannon
Global Advisors & former US
Assistant Secretary of State
for Energy Resources
The Significance of
Namibia’s Oil Discovery
The African Energy Chamber spoke to Frank Fannon,
former United States Assistant Secretary of State for
Energy Resources and current Managing Director of
Fannon Global Advisors, about the significance of
Namibia’s oil discovery.
What are your thoughts on this discovery
and what will it mean for the country’s
energy sector?
This discovery is a game changer for the
country – Namibia’s first oil discovery.
Namibia has had 40 plus years of
uneconomic or dry holes since the Kudu
gas field discovery in 1974.
Shell’s Graff-1 confirms to the global
industry that Namibia has the resources to
attract the world’s best and brightest.
What advice would you give to Namibia
on how to handle exploration and
production of the discovery?
With a discovery of this potential
significance, there are often political
voices that would like to start spending
money and accelerate timelines or cut
corners to meet political rather than
business cycles.
I would encourage the country to stay on a
disciplined path. To focus on the technical
elements, safety, and environmental
performance, among others.
The world, investors, and the broader
industries are watching how Namibia
manages this discovery. It will be
important that the country and the private
sector execute the plan.
What should be done from a regulatory point
of view to develop an oil and gas bill?
Namibia’s lack of discovery success in the past
has meant that it could watch the rest of the
world test different models.
I would encourage the country to integrate the
best elements and reject the bits that
compromise the country’s values.
We know that Namibia wants to increase
foreign investment. Identify and integrate those
factors into legislation. The country would also
like to ensure a long-term industry.
The regulatory context and fiscal regime should
incentivize those goals rather than short-term
returns. Further, since resource projects – oil,
gas, mining – are long-term investments, all
market participants should expect certainty in
decision-making.
What will the discovery mean for local
content?
It is appropriate to encourage local content
especially where that content can add real value
to the enterprise.
In practice, the best application of local content
is when there is clear alignment between the
local business or workforce and the project. At
the discovery stage, there is likely little
opportunity for local content since there is still
more of a design phase.
However, I would expect that there would be more
opportunity for local content as the onshore
services will be required when the project
advances. I would think that there may be some
initial training opportunities for local businesses
and education to explore what those future winwin
situations may be in the near to mid-term.
How does this discovery work in the face of
energy transition and what is the environmental
impact?
High oil and gas prices have underscored that we
will need oil and natural gas for many years into
the future.
The transition away from oil will take many
decades, and it will be uneven with certain regions
able to transition sooner than others. Yet,
increasing calls to address climate change and
transition away from hydrocarbons are very real.
The market, investors, shareholders, and the
public more broadly, will increasingly demand that
those hydrocarbons be produced safely and
environmentally sustainable.
I suspect that concepts align with most
Namibians, particularly given the importance of
tourism.
It will be important for Namibia or any other
project in the world to demonstrate that it is
operating with the environment in mind and with
the highest standards.
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THE ENERGY REPUBLIC I SPECIAL EDITION