Shell plans to write off approximately $400 million for an oil discovery offshore Namibia, which the company deemed commercially unviable, impacting the country’s ambitions to become a crude producer.
Shell stated that the discovered oil and gas resources in offshore block PEL39 in Namibia “cannot currently be confirmed for commercial development.”
Shell, along with its partners QatarEnergy and Namibia’s national oil company, first found hydrocarbons in block PEL39 in 2022, a discovery that, along with another by TotalEnergies in a nearby block, attracted significant global interest in Namibia, a country without oil and gas production.
Over the past three years, Shell drilled nine wells in the license area and made several additional discoveries.
Recently, Portuguese oil company Galp announced a significant discovery in a different offshore license in Namibia.
However, Shell encountered technical and geological challenges in developing the resources.
CEO Wael Sawan informed analysts on October 31 that Namibia’s acreage posed substantial challenges due to the lower permeability of the rock, which made oil and gas extraction more difficult.
Sources revealed that the offshore discoveries also contained high levels of natural gas, further complicating development efforts.
In a trading update before its fourth-quarter results on January 30, Shell disclosed plans to take an exploration write-off of about $400 million, though it did not share specific details.
The company also announced a separate $300 million write-off, primarily related to exploration licenses in Colombia.
