Shell Chief Executive Wael Sawan says determining the commercial producibility and mobility of new energy molecules in Namibia remains a key challenge.
Namibia has emerged as a potential hotspot for the discovery of new energy resources. However, the road to commercialisation has been met with challenges.
“As I have mentioned before, while there is no shortage of volume, the key challenge lies in determining the commercial producibility and mobility of these molecules,” Sawan said during Shell’s second quarter 2024 results analyst briefing.
In Namibia, he said Shell has made progress with exploration and appraisal wells but faces the intricate task of evaluating complex subsurface conditions.
“We are evaluating the complex subsurface conditions,” Sawan explained, highlighting the detailed nature of the exploration work.
Sawan noted that the presence of several active industry players in the region offers a collaborative advantage and this collaborative effort aids in assessing development needs and potential returns.
“What is beneficial is that there are several active players in the region, allowing us all to learn and gain a better understanding of the reservoir and its contours,” Sawan noted.
He also highlighted that significant infrastructure investment is necessary for successful project development and ensuring projects align with the return ranges.
“Investing in this relatively new area will require considerable infrastructure. We need to ensure that the projects are viable and align with the return ranges we outlined during Capital Markets Day 2023,” he said.
Thus, Shell is adopting a careful approach, taking time to thoroughly evaluate the situation before committing shareholder capital.
“Time is on our side as we learn from our analyses as well as those of other industry players,” Sawan said.
This comes as Shell last year cautioned that the first oil from its discovery in Namibia is unlikely before 2030.
Shell has made four significant discoveries in Namibia to date–Graff, La Rona, Lesedi, and Jonker, where the well was drilled to a depth of 6,168 meters in water, which was 2,210 meters deep.
In April 2024, Shell completed its latest deepwater drilling effort offshore Namibia, confirming the presence of hydrocarbons.
The Enigma-1X probe, operated under Petroleum Exploration Licence 39, is currently being drilled by Northern Ocean’s semi-submersible rig, Deepsea Bollsta, which is managed by Odfjell Drilling.
Meanwhile, Northern Offshore’s semi-submersible rig, Deepsea Bollsta, is drilling an appraisal well on the Jonker field. The Jonker-1A appraisal well, which spudded in late August, could potentially be the first field to be tapped by Shell.
Jonker-1A is being drilled more than 22 kilometres northwest of the Jonker-1 probe, indicating the potential size of the discovery.
Jonker is estimated to hold about 2.5 billion barrels of oil in place, according to NAMCOR. Namibia is optimistic about the future economic prospects of the country following the discovery of oil by Qatar Energy, Shell, and Total Energies in the Orange Basin, offshore Namibia.
