Shell has announced it will write down approximately $400 million on its offshore oil discovery in Namibia, a significant setback for the country’s aspirations to become an oil producer. The British energy giant stated that the resources discovered in Block PEL39, located off Namibia’s coast, “cannot currently be confirmed for commercial development.”
The discovery, made in partnership with QatarEnergy and Namibia’s national oil company, initially generated considerable excitement when hydrocarbons were found in the block in 2022. This discovery, along with a nearby find by TotalEnergies, sparked global attention toward Namibia, a country with no active oil and gas production. Shell had drilled nine wells in the region over the past three years, yielding several other discoveries, though the company now faces significant hurdles in developing the resources.
More recently, Portuguese oil company Galp also made a substantial find in a separate offshore block, further boosting interest in the region.
However, Shell encountered several technical and geological challenges in attempting to develop the Namibian reserves. During an earnings call on October 31, CEO Wael Sawan described the country’s offshore acreage as “very challenging,” with lower rock permeability complicating efforts to extract oil and gas. Sources also reported that the discoveries have a high natural gas content, further complicating the feasibility of development.
As part of its financial updates, Shell confirmed it would take an exploration write-off of around $400 million related to the Namibian venture. Additionally, the company will write down another $300 million primarily linked to exploration licenses in Colombia.
This financial setback reflects the increasingly complex nature of offshore oil exploration, where geological and technical difficulties can dramatically affect the commercial viability of discoveries. Shell’s revised outlook underscores the challenges facing energy giants in expanding their global resource base, particularly in emerging markets like Namibia.