Global energy giant Shell has said that it will write down US $400mn on an oil discovery in Namibia after deeming it “commercially unfeasible.”
- The write down is on the 12, 000square kilometres Graff-1X offshore well, where Shell had already sunk nine wells.
- The multinational has said that it made the decision after encountering technical and geological difficulties, including the high natural gas content in the discoveries.
- Oil discoveries in Namibia, which still does not produce oil, have boosted the country’s prospects, with an estimated 2.6bn in proven reserves so far.
“While the Shell write down is unfortunate, the Ministry of Mines and Energy believes that we have barely begun to scratch the surface of the country’s offshore resources,” Tom Alweendo, Namibia’s Minister of Mines and Energy said in a statement on Thursday.
Shell’s decision comes at a time when multinationals are deeply invested in Namibia’s oil prospects. In a nearby offshore oilfield, TotalEnergies operates two licenses. The company is expected to make a Final Investment Decision in 2025, with a prospective start date of 2029. Other companies including Rhino Resources, Galp, Woodside Energy, Global Petroleum, Tower Resources, and Eco Atlantic are at various stages of appraisal and exploration of the southern African country’s prospects as an oil and gas producer.
“There is no need for alarm. Exploration in these blocks is ongoing, and discoveries may need to be tied in with other finds within the basin. It’s worth noting that these blocks are massive, spanning up to 10,000 square kilometers – larger than some countries,” NJ Ayuk, Executive Chairman of the African Energy Chamber said in a statement.
