In January 2022, the fossil fuel-hunting seismic survey ship, Amazon Warrior returned to the Port of Cape Town after the South African High Court blocked Shell from conducting further offshore seismic testing around South Africa's pristine Wild Coast. Shell has now also written down its investment in a once-promising Namibia offshore exploration area. Photographer: Armand Hough/African News Agency(ANA)
Namibia, which has been hoping that large-scale offshore gas and oil finds will significantly boost its economy, has suffered a blow after Shell said it had written down $400 million in oil discoveries offshore Namibia, which it now considers commercially unviable.
A World Bank statement, citing the National Petroleum Corporation of Namibia, said on Wednesday the country could become one of the top world producers of oil and gas by the 2030s, potentially doubling its GDP per capita. However, the commercial viability of the discoveries is uncertain due to the unpredictable nature of oil demand. The offshore fields are in deep water, adding complexity and cost to extraction, while infrastructure such as pipelines and export terminals must be built.
Shell, as cited in a Reuters report Thursday, said the oil and gas reserves discovered in Namibia's offshore block PEL39 "cannot be commercially developed at this time."
Shell, its partners QatarEnergy and Namco, discovered hydrocarbons in block PEL39 in 2022. This discovery, along with a second by TotalEnergies in a nearby block, sparked colossal global interest in this southern African nation that has no oil or gas production.
Shell has drilled nine wells on the licence in three years. There are many other discoveries; recently, Portuguese oil company Galp also started to make a major discovery in a different offshore licence.
In a trading update released ahead of the fourth-quarter results on January 30, Shell said it expected to write off an amount of $400 million for exploration. It did not provide any further details.