Oil major Shell has announced a strategic emphasis on thorough derisking measures before committing significant capital investments in Namibia’s offshore oil and gas sector.
Shell’s CEO Wael Sawan said the company’s cautious stance towards exploration and development activities in the region, prioritises thorough risk assessment to safeguard shareholder interests.
“Our objective is to tap into basins where we feel we possess a genuine competitive edge. This has been particularly evident in the Atlantic Basin, where we leverage resources from the Gulf of Mexico, Brazil, and Nigeria, extending our reach into places like Namibia. We intend to continue expanding in these areas, focusing our efforts where we can achieve the highest return on investment,” he said during Shell’s first quarter 2024 results presentation.
As part of its exploration programme, Shell is actively drilling both appraisal and exploration wells in Namibia.
Sawan stressed the meticulous analysis of results and data from neighbouring blocks to inform strategic decisions, underlining the importance of fully understanding the basin’s complexities before progressing to large-scale infrastructure development.
“We’re not rushing to install facilities. Instead, we’re committed to thoroughly understanding this new basin and its complex reservoirs. While the potential volumes are significant, the reservoir characteristics pose challenges. Therefore, we must ensure that any significant capital investment is sufficiently de-risked to deliver the expected returns for our shareholders,” he said.
The CEO noted that Shell’s dedicated team works tirelessly to strike a balance between efficiency and risk assessment, with recent discoveries by industry peers such as Galp Energia providing valuable insights for the company’s ongoing de-risking efforts.
Galp Energia plans to undertake an exploration campaign spanning three years involving the drilling of 10 exploration and appraisal wells, along with flow testing and an investment of over N$1.5 billion in the first quarter of 2024.
Recently, Shell completed its latest deepwater drilling effort offshore Namibia, confirming the presence of hydrocarbons.
The Enigma-1X probe is currently being drilled in Petroleum Exploration Licence 39 by Northern Ocean’s semi-submersible drilling rig, Deepsea Bollsta, managed by Odfjell Drilling.
Further evaluation is required, according to Upstream, to determine commercial potential. Enigma-1X was spudded at the end of February, approximately 15 kilometres south-southeast of Shell’s Jonker-2A appraisal well.
The PEL-39 Exploration Licence is held by a consortium of QatarEnergy (45% working interest), Shell (operator with a 45% working interest), and the National Petroleum Corporation of Namibia (NAMCOR) (10% working interest).
Shell reportedly allocated a quarter of its deep-water exploration budget for 2023 and 2024 to its oil and gas discoveries in Namibia’s Orange Basin.
Namibia has quickly become a highly attractive exploration and production market following oil discoveries made in 2022 and 2023 by oil majors TotalEnergies (Venus) and Shell (Graff and Jonker-1X) off the coast of Namibia.
Galp Energia, leading a consortium with NAMCOR and Custos, has also confirmed oil discoveries off the coast of Namibia.
