Alweendo: Shell’s decision not a setback

Alweendo: Shell’s decision not a setback

Mines and energy minister Tom Alweendo has responded to Shell’s recent announcement regarding its write-down of about N$7.5 billion (US$400 million) related to oil discoveries in Petroleum Exploration License (PEL) 39.

He said the decision is not a setback for the country’s oil ambitions. 

Shell determined that the discoveries made in some of the wells drilled in PEL 39 were commercially unfeasible due to technical and geological difficulties.  The minister maintained that Namibia remains committed to advancing its oil and gas development initiatives.

“Shell’s decision to write down these discoveries will not significantly impact Namibia’s oil and gas development,” Alweendo stated in a statement released on Friday. 

He expressed optimism about the remaining potential of PEL 39 and other ongoing exploration campaigns.

He highlighted that the government is dedicated to progressing these opportunities with the right partners and investment commitments. “We are positive that the remaining potential of PEL 39 and other exploration campaigns will translate into commercial development,” he added.

Since the initial discovery at the Graff-1X well in 2022, Shell has drilled eight additional wells in PEL 39, located approximately 250 kilometres offshore. 

The wells encompass an area exceeding 12 000 square kilometres.  Although several wells encountered hydrocarbons, challenges related to subsurface complexities have hindered commercial viability.  Alweendo remarked that technological advancements and further geological and geophysical studies are expected to provide deeper insights and unlock the full potential of these resources.

The minister pointed out that other international oil companies actively pursue exploration opportunities in Namibia. 

TotalEnergies is progressing with its multi-well appraisal and exploration drilling campaign in block 2913B under PEL 56.

It aims for a final investment decision in 2025, with the first oil production targeted for 2029. 

Meanwhile, Galp is seeking a new partner for its Mopane complex after successful discoveries at Mopane-1X and Mopane-2A wells. Alweendo underscored that these investments signal a strong commitment from leading international oil companies to unlock Namibia’s offshore resources. 

“While Shell’s write-down is unfortunate, we believe we have barely begun to scratch the surface of the country’s offshore resources,” he stated.  The government remains confident that ongoing exploration efforts will reveal commercial opportunities.

Plans for the first oil production are still on track. In light of Shell’s write-down, Namcor, Namibia’s national petroleum corporation, reiterated its belief in the country’s significant untapped oil resources.  Despite Shell’s challenges, the broader context of Namibia’s oil exploration landscape remains promising. 

The Orange Basin attracts interest from various companies looking to explore its potential.  “Exploration in these blocks is ongoing, and discoveries may need to be tied in with other finds within the basin,” Alweendo reassured stakeholders.

As Namibia navigates these developments, it aims to create a stable investment climate that attracts further exploration and production commitments from international players.  The government’s proactive approach and collaboration with dedicated partners will be key in unlocking the vast potential of Namibia’s offshore resources as it strives to become a significant player in the global oil market. Last year, Ebson Uanguta, the interim managing director of Namcor, expressed optimism about Namibia’s oil production potential. 

He noted that benchmarks indicate that the country could soon see new Floating Production Storage and Offloading (FPSO) units capable of producing between 100 000 to 150 000 barrels of oil daily. 

These FPSOs would also have the capacity to store approximately 1.4 to 2 million barrels of oil and manage over 500 million standard cubic feet of gas daily.

Uanguta highlighted that with ongoing appraisal efforts and a shift toward development, Namibia could emerge as a crude oil exporter by the early 2030s as several projects reach their production peaks. 

He emphasised that the combination of successful exploration activities and technological advancements positions Namibia as a significant player in the global oil market. 

If four FPSOs are deployed by 2035, Namibia could potentially produce over half a million barrels per day, placing it among Africa’s top five oil producers. 

-mndjavera@nepc.com.na