Shell has announced that it will write off $400 million related to an oil discovery offshore Namibia, declaring the project commercially unviable.
This decision is a setback for Namibia, which had high hopes of becoming an oil-producing nation.
The oil giant revealed that resources found in block PEL39, located offshore Namibia, “cannot currently be confirmed for commercial development.” Shell, along with its partners QatarEnergy and Namibia’s national oil company, had discovered hydrocarbons in this block back in 2022.
The discovery, along with a separate find by TotalEnergies in a nearby area, had sparked global interest in Namibia’s oil potential.
Despite drilling nine wells over three years and making several discoveries, Shell ran into technical and geological challenges.
The company said that the rock in the area has low permeability, making it difficult to extract oil and gas. Additionally, the high natural gas content in the discoveries complicated development further.
Shell’s CEO, Wael Sawan, described Namibia’s oil prospects as “very challenging” due to these issues. The company said it will report the $400 million loss in its upcoming financial results in January.
This is not the only setback for Shell. The company also announced a US$300 million write-off related to exploration licenses in Colombia.
While Namibia’s offshore discoveries had generated significant excitement, Shell’s decision highlights the challenges the country faces in developing its oil and gas resources. _Mining & Energy/Reuters.
