Shell’s write-down of Namibia’s offshore oil discovery ‘merely speed bump, not road block’

In a blow to Namibia’s efforts to become a crude producer, the British energy giant Shell has announced a $400 million write-down related to an offshore oil discovery in the southern African nation, citing concerns about the project’s commercial viability,
There have been several oil explorations by major oil conglomerates in Namibia in recent years, with energy companies such as Shell and Total Energies having identified an estimated 2.6 billion barrels of reserves. While Namibia has yet to produce any oil, Shell has said in a statement that the oil and gas resources discovered in offshore block PEL39 “cannot currently be confirmed for commercial development,” citing technical and geological difficulties encountered while developing offshore resources in the southern African country. All eyes were on Namibia when the breakthrough happened in February 2022, with major discoveries by Shell and TotalEnergies in the Graff and Venus blocks. This had generated significant global interest alongside a separate discovery by TotalEnergies in a nearby block.
But according to a recent assessment by the South Africa-based African Energy Chamber (AEC), Namibia “still offers substantial potential in the offshore Orange Basin, confirmed by major projects such as TotalEnergies’ appraisal campaign in PEL 56.” After all, other players, including Chevron, Woodside Energy, Galp and Rhino Resources continue to explore the southern African country’s potential. Portuguese oil company Galp recently announced a notable discovery in a different offshore license, while Chevron said it was looking to make its discoveries in the country by 2025. While stakeholders deem Shell’s $400 million write-down as a “blow to the country,” the AEC, which sees itself as serving as the voice of the African energy sector, considers “this merely a speed bump in Namibia’s oil development rather than a road block” on the long path to fully tap into the country’s significant potential in the offshore Orange Basin and beyond.