Article 5: Winning the Powerplay Isn’t Winning the Match

The powerplay is the exciting part of a cricket match. Runs come quickly, the scoreboard races ahead and the crowd wants the batsmen to keep swinging.

A new oil province can feel much the same.

First oil arrives. Production rises. Government revenues accelerate. Investment flows. Everyone wants more. Gas, meanwhile, can become tomorrow’s problem – reinjected, deferred or treated as something to deal with after the more valuable and easier-to-sell oil has established the pace.

Guyana shows how naturally that can happen. Namibia, which has looked closely at Guyana’s petroleum experience, has the advantage of seeing the issue before its own production story begins.

The question is, therefore, not whether Namibia should develop gas quickly or slowly. It is more important than that: who should set the pace, for what purpose, and against what national development plan?

That question is becoming immediate.

TotalEnergies’ Venus discovery is expected to become Namibia’s first major offshore development.

The company has indicated that the project is technically ready for a final investment decision, while discussions continue with the government over amendments to the standard economic terms for a first-of-its-kind ultra-deepwater development.

Those negotiations may be entirely reasonable. But negotiations normally involve give and take.

If Namibia is being asked to reconsider terms to improve the economics of Venus, should Namibia also ask what it wants in return? And if existing terms are effectively being reopened or amended, should the future pace, availability and use of the associated gas form part of that conversation?

This is not about making development more difficult. It is about ensuring that an oil development does not silently determine Namibia’s gas future by default.

Oil companies make rational commercial decisions. Oil is generally easier to transport, easier to sell and often more profitable than gas.

Associated gas may, therefore, initially be reinjected while the oil project proceeds. That may also be technically necessary to maintain reservoir pressure and maximise oil recovery.

But what is rational for an individual project is not automatically a national gas strategy.

Namibia must eventually decide which fields should be developed first, how hard they should be produced, how much gas should be made available for domestic use, and what reserves should be preserved for future industry.

It must also decide whether the objective is to support as many gas-consuming plants as possible as quickly as possible, or to build an industrial base that can operate reliably for decades.

Trinidad and Tobago offers an important lesson.

The state helped create and de-risk its gas industry through infrastructure, industrial development and fiscal incentives.

Once gas markets were established and projects became attractive, production and downstream investment accelerated.

The result was impressive: liquified natural gas (LNG), ammonia, methanol, electricity and one of the developing world’s most sophisticated gas-based industrial economies.

But success created its own pressures.

Gas reserves were consumed faster than they were replaced. Eventually supply declined, plants were curtailed and some closed.

What once appeared to be abundant gas became a scarce resource competing among LNG, petrochemicals, electricity and other users.

That experience poses a question Namibia should ask early: is national value maximised by adding another plant today, or by extending the productive life of plants, jobs and industries already built?

There is no single answer. But there should be a deliberate answer.

This is where continuous exploration and appraisal become part of gas policy. Every year of production depletes reserves.

Namibia should, therefore, watch not only production growth, but whether new reserves are being added fast enough to replace what is consumed.

The government must also consider mechanisms that protect domestic access.

One such tool is a domestic market obligation, under which producers are required to make an agreed portion of suitable gas available to the domestic market before the balance is exported. But availability alone is not enough. Namibia must also consider a domestic gas-pricing strategy.

If domestic gas is priced too high, electricity and Namibian industry may not be competitive. If it is priced artificially low, investment may be discouraged or the country may simply transfer value from one part of the economy to another.

The challenge is to secure gas at a price that allows producers a reasonable return while enabling Namibia to build competitive domestic value.

These choices should eventually sit inside something larger: a natural gas master plan built around Namibia’s development objectives, rather than one whose starting question is simply what investors require to commercialise discoveries.

Such a plan should help determine the pace of field development, rese