Soon, the elephants could be sensing a strange new vibration. If permission is granted, a junior Canadian oil company will deploy its seismic tractors to survey hundreds of kilometres of these African plains for what might be one of the world’s biggest new oil developments – and possibly its last virgin oil play.
The project, still in its exploration drilling phase, has become a global cause célèbre, with Namibia’s endangered elephants at the heart of it.
This sparsely populated corner of Southern Africa is now a battleground between a Calgary-based company and an informal coalition of environmentalists, Hollywood celebrities, Indigenous activists, wildlife conservationists and Anglican bishops.
Critics warn the oil development could damage a sensitive environment, threaten Indigenous culture and jeopardize the rivers of a watershed area that leads into the fabled Okavango Delta and its vast gatherings of wildlife.
The company, Reconnaissance Energy Africa Ltd. (ReconAfrica), rejects these allegations. And it is far from powerless in this clash. An investigation by The Globe and Mail found the company’s leaders have forged relationships with the Namibian government and with a politically connected businessman in Namibia.
Until late last year, the company faced little public scrutiny, obtaining its exploration licence with few people noticing. But the battle is heating up, with angry protests and petitions. And the herds of elephants, marching across dusty Namibia to their great havens near the Okavango in northern Botswana, are one of the fiercest points of dispute.
When the giant animals sense the noise of the oil drilling and seismic activity, will their migration be dangerously disrupted, throwing an endangered species into deeper peril? Or are the elephants too far away and too few to worry about, as the company has insisted?
Beyond the fury of the environmental skirmishes, another global issue is looming. In an era of worsening climate change, should Namibia listen to groups such as the International Energy Agency and consider cancelling the project entirely? Is this the last gasp of a fading industry? Or is it Namibia’s best hope for escaping poverty and generating desperately needed jobs and energy, as its proponents argue?
ReconAfrica’s exploration licences cover a massive territory: about 35,000 square kilometres of the Kavango Basin in northeastern Namibia and northwestern Botswana. The area is adjacent to the Khaudum and Bwabwata national parks and two UNESCO world heritage sites – the Okavango Delta, which attracts one of Africa’s greatest concentrations of wildlife, and Tsodilo Hills, which contains more than 4,500 rock paintings and other sites from thousands of years of human habitation.
Elephants, African wild dogs, lions, cheetahs and zebras roam the rolling grasslands and desert of this region. How much oil is buried beneath them is more nebulous. ReconAfrica acknowledges there’s some conjecture around the figure, but its geochemist, Daniel Jarvie, estimates between 60 billion and 120 billion barrels.
Serendipity played a large role in the company securing what it believes to be the world’s last untapped sedimentary basin.
Its Canadian co-founders, Craig Steinke and Jay Park, have known each other for more than a decade, working together on projects around the world. For years, Mr. Steinke has also worked alongside Mr. Jarvie, drilling engineer Nick Steinsberger, and with ReconAfrica chief executive officer Scot Evans when Mr. Evans was at Halliburton Co.
During a recent interview from his B.C. home, Mr. Steinke told The Globe how, in 2013, he landed a worldwide dataset of potential undeveloped oil and gas plays. One of those was in the Kavango region. An old well drilled in 1964 gave him a geological hunch that oil was about, so he leased land in the area.
In 2014, in conversation with officials at Namibia’s Ministry of Mines and Energy, Mr. Steinke discovered the government had flown a magnetic survey over the lands he was leasing. Was he interested in buying it? He was. He did. And he sent the data to colleagues in Houston. “The interpretation came back very positive, in that there was a big, deep sedimentary basin here that nobody knew was there,” he says. “So I consummated the leasing of the lands in early 2014, and that’s how one little company wound up with an entire sedimentary basin.”
Despite some offshore exploration, Namibia is far from a traditional oil hot spot. That has resulted in myriad challenges for ReconAfrica, the largest of which was the lack of drilling rigs in the country. In summer 2019, when the company tried to find contractors who could drill the three wells contracted under its agreement with the Namibian government, it discovered there were no land rigs in the vicinity.
“It didn’t take long to realize we could actually buy our own rig, drill these three wells, and own the rig at the end of the day for about half the cost that these drilling contractors were quoting us,” Mr. Steinke says.
The solution? Buy a rig in Texas, refurbish it for use in the desert climate, sail it to Namibia on a 600-foot-long transport ship called the Yellowstone, and truck it inland to ReconAfrica’s drilling lease. After pandemic-related delays, the rig landed in December, 2020.
In January, ReconAfrica drilled its first well. On May 5, it announced its second.
Under its partnership contract with the Namibian government and state-owned oil company NAMCOR, ReconAfrica will drill three wells and establish whether there’s an active petroleum system.
At first blush, it looks promising. The company has already found light oil and natural gas with a high energy content. “Fantastic,” Mr. Steinke says, “but it’s a long process to deeming the play commercial.”
While the technical obstacles have been significant, the company always had one big advantage: its strong relationship with the Namibian government, which has been eagerly hoping to build an oil industry and generate new revenue sources for the country of fewer than three million people, traditionally reliant on tourism and mining.
“It was very important to find the governments that needed Indigenous sources of energy and would be very supportive of ReconAfrica’s efforts,” Mr. Steinke says. “They had a very good, modern petroleum regime and great fiscal terms.”
Mr. Park, an oil and gas lawyer who for years was based in Calgary and is now ReconAfrica’s chair, has been central to the company’s efforts to develop close relations with the Namibian Energy Ministry. “He’s done a wonderful job ingratiating the company with the ministry,” Mr. Steinke said in an online presentation to investors last year.
This, indeed, is an area of expertise for Mr. Park, who has long experience in 17 African countries and is now based in London. But critics say his relationships with African governments have occasionally been questionable. They point to a report by a United Nations monitoring group in 2015 that alleged a conflict of interest in Mr. Park’s role as a legal adviser at Somalia’s Petroleum Ministry.
In 2013, the Somali ministry had awarded a dozen offshore oil and gas blocks – totalling 60,000 square kilometres – to a small British company, Soma Oil & Gas, which had been incorporated only a few months earlier. The British company later paid more than US$494,000 to Mr. Park’s firm for the legal services he provided to the ministry during the negotiations for the deal, according to the report by the UN Monitoring Group on Somalia and Eritrea.
The monitoring group cited a report by a ministry legal adviser who said the government might not have received proper legal representation in the negotiations because Mr. Park had a conflict of interest.
Mr. Park denies any impropriety. He says the Somali government asked the British company to pay his legal fees after the oil deal negotiations were concluded, and he describes this as a common arrangement.
In the same report, the UN group said Mr. Park had been involved in an earlier incident in 2011 in which his team of lawyers helped transfer a US$2-million payment from Calgary-based Griffiths Energy International Inc. to a company owned by the wife of the ambassador of Chad, a notoriously corrupt African country where Griffiths was seeking oil and gas rights. The payment led to a bribery investigation by the RCMP, and Griffiths eventually agreed to pay a fine of more than $10-million.
This week, U.S. authorities announced they had filed criminal charges against two former Chadian diplomats and a co-founder of Griffiths in connection with the bribery scheme. The company’s co-founder, Naeem Tyab, has pleaded guilty and agreed to forfeit US$27-million in criminal proceeds, the U.S. Justice Department said.
Mr. Park says his team inquired, at the time of the US$2-million payment, whether it was going to government officials and was assured it was not. He says the company later discovered the connection to the ambassador’s wife, and he helped the company to self-investigate and voluntarily disclose the payment to the RCMP.
In Mr. Park’s latest venture, analysts have pointed to a different kind of connection between the oil company and the government. ReconAfrica has confirmed that last year it retained the services of a controversial Namibian businessman, Knowledge Katti, who has been the frequent subject of local media reports for his close links to senior Namibian officials, including President Hage Geingob.
In an interview with The Globe, Mr. Park initially said ReconAfrica had no involvement with Mr. Katti. But a company spokesperson later said Mr. Katti was “briefly engaged as a media relations consultant for ReconAfrica in Namibia, starting in October 2020” and no longer has any business relationship with the company.
Mr. Katti, according to many reports in media outlets over the past decade in Namibia and South Africa, is a friend of Mr. Geingob. He has often travelled abroad with the President, sometimes as a member of official delegations, and has even paid for some of Mr. Geingob’s medical bills.
He has a long history of involvement as a middleman in mining and energy deals in Namibia, often with Canadian companies or other foreign investors. In leaked e-mails in 2017, he spoke of his political influence and his “inside contacts” in the government, and promised to “work the magic” on behalf of a business partner, according to media reports.
“It’s a matter of great concern if someone with close links to the President is also connected to a company that is involved in highly controversial and potentially damaging extractive activities,” says Graham Hopwood, executive director of the Institute for Public Policy Research in the Namibian capital, Windhoek.
“We need Namibian institutions to remain scrupulously independent as the activities and plans of ReconAfrica are monitored and assessed,” he told The Globe. “The allocation of petroleum exploration licences in Namibia has been mired in controversy for years with very little transparency about who is benefiting. The granting of such licences needs to be opened up to public scrutiny and the involvement of politically connected persons ruled out.”
Annette Hubschle, a senior research fellow at the University of Cape Town and a member of a Namibian environmental group, says she’s concerned by the role of Mr. Park and Mr. Katti in the ReconAfrica development because of their involvement in questionable earlier deals. It’s part of a larger pattern in Southern Africa, she says. “Oil explorations across the region have been mired in environmental, political and social scandals with long-term devastation for local and Indigenous communities.”
The impact on those communities is the subject of heated debate. James Suzman was the first social anthropologist to work in Namibia’s eastern Omaheke region – on the southern edge of where ReconAfrica is tapping for oil – and has written extensively on the San Indigenous people who live there. He also helped develop local consultation processes for diamond mining giant De Beers in next-door Botswana.
What worries him about the ReconAfrica project is the lack of full consultation with local communities. Consultations require community meetings, he says. They require scale, complexity, long and careful checklists. “The process of getting prior and informed consent is not about sticking out pamphlets and holding a few bloody community meetings,” Mr. Suzman said in a recent interview from Britain. “You record everything, do everything, you go back and forth. It requires, above all, time.”
ReconAfrica’s Mr. Steinke counters his company has gone over and above what’s required. A Namibian team has translated pamphlets about the project into local languages and dropped them off to rural villages. The company has taken out radio and newspaper ads. It has drilled community water wells.
He argues this has resulted in broad support for the operation, but acknowledges there’s always room to expand stakeholder relations.
For Mr. Suzman, though, the fact local communities tend to be politically marginalized has opened up the very real possibility of the Namibian government “steamrolling through.”
As global awareness of the project grows, so does opposition to it. The Okavango Delta is world-famous, not just among environmentalists but also among ecotourists and travellers.
Locally, a farmer has taken the company to court over land issues, and more than 30 Southern African Anglican bishops recently labelled the project a sin. Hollywood star Leonardo DiCaprio has criticized ReconAfrica’s plan, Canadian environmentalist groups are demanding officials here hold the company accountable for what they deem ecologically questionable activities, and the UNESCO World Heritage Centre has voiced concern about the oil development’s potential impact on the heritage sites.
Mr. Steinke dismisses those objections. “It’s easy to criticize” an oil project on another continent when you live in the developed world, he says, where the lights flick on at the touch of a switch and clean water is a simple matter of turning a tap.
Darias Jonker, who monitors Southern Africa for the Eurasia Group, a political risk consultancy firm, agrees that opposition to the project is comparably light on the ground in Namibia, but says it’s nothing to do with apathy. Rather, he says, it’s that the project is in a sparsely populated region, combined with the fact there’s no strong political opposition in the country.
“There aren’t too many communities directly affected by this, and this is also one of the reasons why the initial stages of the project managed to slip by relatively unnoticed. But now there’s this rapidly escalating opposition to these plans, because they do threaten the very fragile ecosystem,” he says.
He thinks it also helps the project is still in its exploration stages, although that may change if ReconAfrica finds the proof it wants to ramp up operations into commercial production – a prospect Mr. Park says he’s “very bullish about.”
The elephants are one of the most crucial issues in the environmental battle. If the company gets approval, it will move ahead with seismic testing for 40 days over a 450-kilometre stretch of territory, largely on public roads, using a tractor-sized vehicle. ReconAfrica says the seismic survey will not interfere with wildlife communication or migratory movements, and will be monitored by a wildlife expert on the company’s staff. The elephant migration route at the southern end of its exploration area will be a no-go zone, Mr. Steinke says.
But environmentalists are skeptical. Elephants don’t necessarily walk in clearly defined paths, they say. When an oil company operated near a national park in Uganda, elephants moved up to eight kilometres away from the seismic activity and shifted to nocturnal activity to avoid the daytime operations, according to scientific studies.
“Until absolutely proven to not harm savannah elephants, the seismic activity should be halted,” the environmental group Frack Free Namibia and Botswana said in a 14-page submission to Namibia’s environmental commissioner.
If ReconAfrica wants to begin production, Mr. Jonker expects opposition to grow, and quickly. Court challenges, international pressure through diplomatic and financing channels, environmental lobbying – “they certainly are not going down without a fight.”
Earlier this year, ReconAfrica made the 2021 TSX Venture 50, a ranking of the top performers on the exchange, selected based on their ability to access capital for growth and scale up their business. But in an early example of the international lobbying, U.S. Senator Patrick Leahy this week called for “prompt and thorough scrutiny” of the Namibia project by the U.S. Securities and Exchange Commission.
Earlier this month, a 44-page complaint was filed at the SEC, alleging ReconAfrica may have misled investors in press releases and other promotional material. More than 150 promotional items about the company have been disseminated by ReconAfrica and third-party promoters since 2019, often containing misleading information or failing to disclose the compensation paid to the publishers or their financial interest in the company’s stock, according to the SEC complaint, which was provided to The Globe with the complainant’s name kept confidential.
A check by The Globe showed ReconAfrica has been the focus of numerous glowing articles on oilprice.com over the past eight months. Each is by a different author with no other online presence and only a single byline on the website.
The company says it has been transparent and legal in all of its finances, and the SEC complaint is an unproven allegation. “Anyone can file a complaint with the SEC,” it says. “There are no standards or requirements for accuracy or truth for these filings.”
Neil Brown, a senior fellow with the Atlantic Council’s Global Energy Centre, says he believes there’s a possibility of a “significant backlash” against the company – not only because of international activism against drilling near one of the most important wildlife habitats in Africa, but also because of concerns that ReconAfrica is not taking sufficient environmental precautions to protect drinking water in a country that “has essentially no enforcement capabilities.”
Namibia’s Minister of Agriculture, Water and Land Reform, Calle Schlettwein, said publicly this week his ministry has not yet issued permits to the company for the water boreholes it has been drilling. The company responded by saying it has the “necessary consent” from the traditional authorities in the region.
Mr. Brown also points to the fact Namibia’s long history of mining doesn’t translate into a framework to manage oil resources. Nor is the country a participant in the Extractive Industries Transparency Initiative, the basic global standard followed by 55 countries for transparency and good governance in oil, gas and mining. Oil rushes, he says, “have a bad track record across much of sub-Saharan Africa in terms of promoting corruption, distorting the economy, perpetuating inequality locally and failing to meet expectations of economic development.”
Mr. Park of ReconAfrica acknowledges Namibia’s onshore oil regulations will require further work, particularly around rules that govern the abandonment of wells. Still, he says the company’s development plan will address how abandonment is done properly and funded adequately.
But why Africa? And why now? After all, the International Energy Agency’s most recent report, released May 18, pulled no punches: Fossil fuels should play a virtually non-existent role in a world striving to meet its goal of net-zero emissions by 2050.
The Paris-based agency recommends an immediate halt to investment in all new oil, gas and coal projects. Limiting the worst effects of climate change will require a huge decline in the use of fossil fuels, it says, falling from almost four-fifths of total energy supply today to slightly more than one-fifth by 2050. For oil specifically, it says the lion’s share of supply will likely come from OPEC countries. (Namibia is not an OPEC member.)
That leads to the question of why a massive virgin oil play in Southern Africa would be developed at all.
“It is difficult to begrudge a poor country from wanting to develop,” Mr. Jonker says. But he says the project’s cost-benefit calculation needs “a lot of scrutiny.”
At ReconAfrica, Mr. Steinke acknowledges the world is undergoing an energy renaissance, but says governments have to get real about how to meet targets for cleaner energy. As it stands, he says the timeline politicians have set out for energy technology is “fanciful thinking.”
Namibia is better placed financially than some of its neighbours, but it remains relatively poor, and there are few economic drawcards save for tourism, fishing and mining (mostly diamonds). That leaves the country thirsty for revenue options, and the potential royalties geyser from a giant oil reserve is an attractive proposition.
Under a roadmap set out by former president Sam Nujoma in 2004, Namibia plans to become “a prosperous and industrialized nation” by 2030. The country detailed a host of lofty goals, including processing natural resources and building industries in all sectors of the economy.
“How do you even have another industry if you don’t have energy?” Mr. Steinke asks. “It can’t be done. This area needs help.”
ReconAfrica employs about 200 Namibians, comprising around 80 per cent of its work force. Half of those are locals from the region surrounding the project. But Mr. Suzman argues the oil project isn’t particularly labour-intensive. “I can’t imagine any project like this generating considerable local value in any substantive way, shape or form,” he says.
ReconAfrica takes a different view. Mr. Steinke says if critics spent time in Namibia to understand generational poverty in the Kavango, they would walk away with a different attitude.
“ReconAfrica is not here to flip the property,” he says. “That’s not our intention. We’re here for the long term.”