The Namibian National Petroleum Corporation (Namcor) is adamant that Namibia possesses significant untapped oil resources, despite Shell’s reported intention to write down nearly N$7.5 billion (US$400 million) related to an offshore oil discovery in the country. 

Shell recently announced that the oil and gas resources identified in offshore block PEL39 in Namibia cannot be validated for commercial development. 

Namcor spokesperson Utaara Hoveka told New Era yesterday that the company has not yet received any official communication from Shell regarding the definitive assessment of the commercial viability of Block PEL39. 

He said in such an event, Namcor will not be financially impacted by the decision, as it carried no financial investments into the initiative.

“Namcor would not have any financial exposure – even in the event of a non-commercial conclusion, as we are a carried partner. All financial investments and risks were carried out by the operator”.

In collaboration with Shell and QatarEnergy, Namcor first identified hydrocarbons in block PEL39 in 2022. 

This discovery, along with another made by TotalEnergies in a nearby block, has generated significant global interest in the southern African nation, which currently lacks oil and gas production. 

Over the past three years, Shell has drilled nine wells within the license, resulting in several additional discoveries. 

“We remain firm in our conviction that Namibia is a rich under-explored oil province. With more hydrocarbon exploration activities, the country’s full petroleum potential will certainly be realised,” he asserted.

More recently, Portuguese oil company Galp also made a major discovery in a different offshore license.

However, the British company encountered technical and geological difficulties in the development of the resources.

CEO Wael Sawan told analysts on 31 October 2024 that Namibia’s acreage was “very challenging”, and that the lower permeability of the rock made extracting oil and gas harder.

Sources told Reuters that the offshore discoveries also had a high natural gas content, further complicating their development.

The company said in a trading update ahead of fourth-quarter results on 30 January 2024 that it expects to take an exploration write-off of around N$7.5 billion without providing details.

The company said it will take another US$300 million (N$5.6 billion) write-off related mainly to exploration licenses in Colombia. 

-Additional reporting by Reuters

-mamakali@nepc.com.na