Shell has clarified that its $400 million impairment related to an oil discovery offshore Namibia stems from challenges in finding a viable commercial pathway to monetize the resource.
Despite the financial write-off, the company remains optimistic about Namibia’s future prospects.
Speaking on the decision, Shell CEO Wael Sawan emphasized that the move is a prudent financial adjustment and not a withdrawal from Namibia.
“We have a significant amount of data to work with. But suffice it to say, at this stage, we haven’t identified a commercial pathway, which is why the impairment was triggered. If things change, we might reassess, but for now, this is the prudent way forward,” Sawan said.
The announcement follows Shell’s earlier disclosure that it would write off $400 million tied to its Namibian exploration efforts, part of a broader $649 million exploration well investment impairment in the final quarter of 2024.
Shell, in collaboration with QatarEnergy and Namibia’s national oil company, discovered hydrocarbons in Block PEL39 in 2022. However, despite drilling nine wells over three years, the company encountered significant technical and geological challenges, including low rock permeability and a high natural gas content, complicating resource extraction and development.
“The reason for the impairment, however, is more about our inability to find a commercial pathway to monetize that resource. This by no means suggests that there won’t be opportunities in the future. We continue to explore those possibilities,” Sawan added.
The write-off is a setback for Namibia, which has been positioning itself as an emerging oil producer. Nevertheless, Minister of Mines and Energy Tom Alweendo expressed confidence that the country’s oil and gas potential remains intact.
According to the Bank of Namibia, the oil and gas sector has yielded N$33.4 billion in foreign direct investments (FDI) inflows between 2021 and 2023.
