The National Petroleum Corporation of Namibia (NAMCOR) has reaffirmed its optimism about Namibia’s untapped oil potential, despite Shell’s announcement that it plans to write down approximately US$400 million over an offshore discovery deemed commercially unviable.
NAMCOR Spokesperson Utaara Hoveka expressed confidence in Namibia’s standing as a promising frontier for hydrocarbon exploration.
“We remain firm in our conviction that Namibia is a rich, underexplored oil province. With more exploration activities, the country’s full petroleum potential will certainly be realized,” Hoveka said on Thursday.
Shell’s decision relates to its exploration activities in Block PEL 39, where it had made a major hydrocarbon discovery in 2022 alongside partners QatarEnergy and NAMCOR. However, challenges, including lower rock permeability and high natural gas content, have made the resource commercially difficult to develop.
Despite this, Hoveka clarified that NAMCOR has not received formal communication from Shell regarding the block’s viability. “As a partner, we have not received any formal communication from Shell concerning the conclusive outcome on the commercial viability of Block PEL 39,” he said.
Hoveka further emphasized that NAMCOR, as a carried partner in the project, has no financial exposure to risks associated with the venture. “NAMCOR would not have any financial exposure even in the event of a non-commercial conclusion, as we are a carried partner. All financial investments and risks were carried by the operator,” he explained.
Shell’s setback is seen as a blow to Namibia’s aspirations of becoming a crude producer, but NAMCOR remains resolute that the long-term prospects for the country’s oil and gas sector remain intact.
Shell’s exploration efforts in Block PEL 39 began in 2022, with nine wells drilled over three years. Alongside TotalEnergies’ discoveries in a neighboring block, these efforts sparked significant global interest in Namibia’s offshore oil and gas potential.
Portuguese oil company Galp has also reported a major discovery in a separate offshore block, further underscoring Namibia’s potential as an emerging player in the energy sector.
However, Shell CEO Wael Sawan recently noted technical and geological challenges in the Namibian acreage, including difficulties with rock permeability, during a briefing to analysts on October 31. The company also highlighted a high natural gas content in the discoveries, complicating their development.
In a trading update ahead of its fourth-quarter results, Shell announced it expects to take a US$400 million exploration write-off related to Namibia and an additional US$300 million write-off for exploration licenses in Colombia.
Despite Shell’s setback, NAMCOR remains steadfast in its belief that Namibia’s vast, underexplored oil reserves will play a significant role in the global energy landscape.
