Oil major Shell Plc has announced that it has incurred a substantial $400 million loss in its oil exploration activities in Namibia.
The British energy company informed Reuters on Wednesday that the oil and gas resources discovered in the offshore block PEL39 in Namibia cannot currently be confirmed as commercially viable for development.
Shell, along with other major oil companies, has been actively engaged in exploration activities in Namibia, a southern African country whose recent oil discoveries have generated significant excitement among investors.
This announcement from Shell, however, is a setback for Namibia, which is positioning itself to become a crude oil-producing nation.
Shell, in partnership with QatarEnergy and Namibia’s national oil company, first discovered hydrocarbons in block PEL39 in 2022. This discovery, along with another by TotalEnergies in a nearby block, attracted global attention to Namibia, a country that currently has no oil and gas production.
SHEL applied for a license to drill another 10 exploration and appraisal wells in the country in 2023, showcasing its long-term commitment to unlocking the region’s hydrocarbon potential.
Over the past three years, Shell has drilled nine wells in the license area, resulting in several additional discoveries.
CEO Wael Sawan told analysts on Oct. 31 that Namibia’s acreage was “very challenging,” and that the lower permeability of the rock made extracting oil and gas harder.
Shell further stated in a trading update prior to the fourth quarter results on January 30 that it anticipates taking an exploratory write-off of around $400 million and another $300 million write-off, primarily related to exploration licenses in Colombia.
What you should know
Portugal’s oil and gas company, Galp, in December 2024 also found more light oil and gas condensate in the second of up to four wells within its current exploration and appraisal (E&A) program in license PEL 83 off the coast of Namibia, close to discoveries made by Shell and TotalEnergies.
PEL39 covers 12,000 km², and its ownership structure consists of Shell Namibia as the operator with a 45% working interest (WI), QatarEnergy with a 45% WI, and NAMCOR holding the remaining 10%. The final investment decision (FID) is anticipated in 2026, with the first oil production expected by 2030.
