BUSINESSMAN Knowledge Katti stands a chance of making around N$42 million by selling 1% of a petroleum block joint venture near a hotspot in Namibia where oil has been discovered.
The block is situated north of recent discoveries by TotalEnergies, QatarEnergy and Shell.
In 2018, Katti and his Australian partners, Pancontinental Energy, obtained the 87 oil licence which covers oil block 2713.
The ownership of the block was divided as follows: Pancontinental Energy owns 75%, Katti owns 15%, and the National Petroleum Corporation of Namibia (Namcor) owns 10%.
Katti has become one the biggest beneficiaries of recent oil discoveries off the coast of Namibia.
He is linked to at least two or three deals involving the alleged discovery of oil in Namibia.
Last week, Pancontinental announced they have entered into a deal to sell a majority stake in their joint venture with Katti to Australia’s biggest oil and gas producer, Woodside Energy.
“Woodside and Pancontinental have signed an option deed providing Woodside a future election to enter the deep-water Namibia PEL 87 exploration project,” the statement said.
According to Pancontinental, Woodside Energy will fully fund an estimated US$35 million (N$640 million) three-dimensional seismic survey.
In addition, the statement said, Woodside Energy will pay Pancontinental US$1,5 million (N$25,5 million) in cash.
As a result, Woodside Energy will have the exclusive option to enter the PEL 87 licence and joint venture with 56% and rights to run the partnership.
Pancontinental was initially set to end up with a 19% stake in the partnership if Woodside bought the 56%.
“To ensure Pancontinental retains at least a 20% interest in the project if Woodside exercises its option, Pancontinental has, for a consideration of US$1,5 million (N$25,5 million), entered into an option agreement with Custos Investments (Pty) Ltd (Custos) to acquire a 1% interest from Custos by paying them a further US$1 million (N$17 million),” the statement said.
This means Pancontinental would pay Katti’s company, Custos, around N$42 million for the 1%.
Katti would be left with 14% if the transaction is concluded.
“Pancontinental has a ‘backup’ right to convert its interest to a 1,5% overriding royalty interest on revenue derived from the sale of oil or gas produced from PEL 87,” the company said.
Pancontinental’s director, Barry Rushworth, in the same statement said “energy giants are jockeying for position after major oil discoveries by Shell and Total offshore Namibia. Pancontinental’s PEL 87 has very high potential, with contiguous geology to the discoveries”.
Questions sent to Katti this week were not answered.
He is quoted on www.offshore-energy.biz as saying the latest transaction strengthens the positioning of both Custos and Sintana in Namibia.
“Specifically in an area that has emerged as the exploration hotspot in recent years,” he said.
Sintana Energy is a Canadian oil and gas company, which through a stake in Custos Investments also has a stake in PEL 87. Katti is the chief executive officer of Custos and the director of Sintana.
He has been accused by his former South African business partners of making off with more than N$60 million from oil exploration deals they believe should have been shared among them. Katti is considered a politically connected individual due to his close ties with president Hage Geingob, planning minister Obeth Kandjoze and Namcor managing director Immanuel Mulunga.
Mulunga yesterday said Namcor is aware of the deal between Pancontinental, Custos and Woodside Energy.
“But this has nothing to do with Namcor. It’s the other joint venture partners selling among themselves. What I can say is that the entry of Woodside Energy into the country is a good thing,” he said.
WHEELER DEALER
Pancontinental Energy is widely known among industry players for being a junior operator.
They bought the interest of Paragon Investment for N$32 million in a different oil block in 2012.
Paragon is owned by politically connected businessmen Desmond Amunyela and Lazarus Jacobs.
The latest agreement comes at a time when minister of mines and energy Tom Alweendo said his ministry has evidence that those awarded exploration rights without the requisite capability to do exploration have created a trading market for such rights.
Speaking in the National Assembly last week, Alweendo said: “This is tantamount to auctioning exploration rights, except that the revenue so derived does not accrue to the state, but to the few individuals who were lucky enough to acquire such rights.”
Institute for Public Policy Research (IPPR) executive director Graham Hopwood yesterday said the Ministry of Mines and Energy has over the years encouraged foreign oil investors to link up with Namibian briefcase companies often owned by the politically connected.
He said these companies sit on petroleum exploration licence arrangements, sometimes for years, waiting for an oil major to show an interest in the hope of a large pay-off.
“The recent offshore discoveries have created a bonanza for these briefcase or shell companies and those who nominally own them, as well as their beneficial owners,” he said.
He said it is crucial that the benefits of these oil resources go to the people of Namibia and not just a chosen few.
Alweendo, Woodside Energy, Pancontinental Energy and the petroleum commissioner in the Ministry of Mines and Energy, Maggy Shino, did not respond to questions sent to them this week.
Credit – Taken from – Katti could pocket N$42m from 1% oil block sale – The Namibian
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