Shell downplays Namibia's oil discovery as a blow to the country

Shell has written down $400 million in oil discoveries offshore Namibia, which it considered commercially unviable. This is a major blow to Namibia's attempts to become a crude-producing country.

Shell said that the oil and gas reserves discovered in Namibia's offshore block PEL39 "cannot be commercially developed at this time."

Shell, its partners QatarEnergy, and Namibia's National Oil Company discovered hydrocarbons in block PEL39 2022. This discovery along with a second TotalEnergies in a block nearby sparked colossal global interest in this southern African nation that has no oil or gas production.

Shell has drilled nine wells on the license in the last three years.

There are many other discoveries

Recently, the Portuguese oil company Galp has also begun to make

a major discovery

In a different licence offshore.

The British company faced technical and geological problems in developing the resources.

Wael Sawan, CEO of Namibian Oil and Gas Company, told analysts on October 31 that Namibia's land was "very challenging" and that the lower permeability made it harder to extract oil and gas.

The offshore discoveries were also a source of concern, according to sources.

High Natural Gas Content

This will further complicate their development.

In a trading update released ahead of the fourth quarter results, on January 30, the company stated that it expected to write off an amount of $400 million for exploration. It did not provide any further details.

The company announced that it will write off another $300 million, mainly related to exploration licenses in Colombia. (Reporting and editing by Chris Reese, Nick Zieminski and Ron Bousso)

(source: Reuters)