Plans for an energy hub in Namibia could be derailed by a land issue

A conflict in Namibia regarding the land surrounding Luderitz, which is abundant in diamonds, is currently posing a risk to significant energy initiatives, according to government and company representatives. In response, the government is intensifying its efforts to find a resolution to the dispute.

Extended delays could potentially deter investors during a critical period for Namibia, as it strives to expedite its initial oil production after significant offshore discoveries by TotalEnergies, Shell, and Galp.

In the midst of the disagreement lie expansive desert areas surrounding Luderitz and Elizabeth Bay, located 25 kms to the south. These areas are included in a mining license owned by the Sperrgebiet Diamond Mining (SDM) company, which is crucial for various projects.

“Currently, the ministry and license holder are engaged in discussions to identify the most suitable solution to tackle the land access issue,” stated a spokesperson from the mines and energy ministry.

In addition to an 800-megawatt gas-to-power plant that has been proposed, Hyphen Energy’s $10 billion green hydrogen project and two wind farms are among the projects that may be impacted as the year-long deadlock continues, according to officials.

Elizabeth Bay is the location where BW Energy (BWE.OL) intends to establish a pipeline connecting its offshore Kudu gas field to a gas-to-power plant and liquefied natural gas facility.

BW Energy, which delayed a final investment decision on its Kudu project, previously informed Reuters that acquiring land for constructing a power plant and a 40 km onshore pipeline presents a significant challenge.

“We have been at a standstill for a year trying to finalize the details of our coordination and cooperation once we are up and running … this is a matter of great urgency,” emphasized Manfriedt Muundjua, a high-ranking official from BW Energy, during an energy conference in April.

The co-owners of SDM are currently involved in a legal dispute in Windhoek high court, which is causing complications in land negotiations. This dispute arose when the mine’s majority shareholder, Dubai-based GEM Group, was sued by its minority partner, Lewcor, over allegations of asset stripping.

“We are currently in discussions with the mine operators, but the process is taking longer than anticipated and we are facing time constraints,” expressed Phillippus Balhao, the mayor of Luderitz.

($1 is equivalent to 18.3666 Namibian dollars)