Oil discovery will not lead to cheaper local fuel price- Alweendo
The recent oil discoveries by Shell, Total Energies and Qatar Energy will not necessarily lead to cheaper local fuel prices in the country, Mines and Energy Minister, Tom Alweendo said.
Alweendo said it depends on various factors such as the costs to extract the crude and the cost to refine it and given that this will be deepwater extraction, the extraction cost is likely to be much higher than in some other jurisdictions like the Middle East.
“This is, however, not a sufficient reason not to invest in a local refinery. It will all depend on the economics of such an investment and an assessment of that will be made at an appropriate time,” Alweendo said in Parliament this week.
At the beginning of this year a barrel of crude oil cost US$78, and today it cost US$110, an increase of 41%. At the beginning of March, fuel prices increased to the highest ever, standing at N$17.15 per litre for petrol and N$17.28 per litre for diesel.
Alweendo further said while the discovery is good news for the country, crude oil production will not start immediately.
“We need to be aware that more analytical work needs to be done before the construction of the platforms to extract the oil commences. We, therefore, need to exercise a bit of patience, provided of course that our patients should not prevent us from doing what needs to be done in preparation of when the production commences,” he added.
The minister further said the government looks forward to working with Shell, Total Energies and Qatar Energy to expedite the process of bringing the discoveries to production.
“Going forward, we need to form a strategic partnership rooted in a collaborative leadership to ensure a mutually beneficial relationship,” Alweendo said.