Business Reporter
THE Ministry of Mines and Energy has announced that global oil giant Shell encountered technical and geological difficulties in the PEL 39 well located offshore Namibia. These challenges led to the determination that discoveries made in some of the wells drilled were not viable for commercial development.
The Ministry also said that Shell will write down $400 million on an oil discovery made in Petroleum Exploration License (PEL) 39 in accordance with the company’s accounting principles.
Minister of Mines and Energy Tom Alweendo explained that the discoveries were considered commercially unfeasible, with Shell citing technical and geological challenges.
“However, together with their partners Qatar Energy and NAMCOR, Shell will continue to explore potential commercial pathways to development while actively looking for further exploration opportunities in PEL 39. Since the initial discovery of the Graff-1X well in 2022, Shell has drilled eight wells at PEL 39, with various wells encountering hydrocarbons. PEL 39 is situated 250 km offshore in deep water, covering an area of more than 12,000 km². While initial assessments revealed challenges related to subsurface complexities and reservoir quality, there is significant potential for improvement as exploration and technical analysis continue. Advances in technology, coupled with further geological and geophysical studies, are expected to provide deeper insights and unlock the full potential of these resources,” Alweendo said.
He added that the collective discoveries from the nine drilled wells represent significant volumes of hydrocarbon accumulations.
“The Government of Namibia remains committed to developing these discoveries, which are believed to be commercially viable. We are dedicated to progressing these opportunities with the right partners and the appropriate investment commitments. The Ministry of Mines and Energy emphasizes that Shell’s decision to write down the discoveries will not significantly impact Namibia’s oil and gas development. It is not a setback. We remain optimistic that the remaining potential of PEL 39 and other exploration campaigns will translate into commercial developments. Shell’s discoveries in PEL 39 are just some of the many exploration milestones witnessed offshore Namibia since 2022,” the minister said.
Alweendo highlighted TotalEnergies’ progress in its multi-well appraisal and exploration drilling campaign in Block 2913B, located in PEL 56.
“The company aims to make a Final Investment Decision in 2025, with first oil targeted for 2029. Concurrently, Galp seeks to bring in another partner for the Mopane Complex, following two discoveries at the Mopane-1X well and its successful appraisal in the Mopane-2A well in 2024. The Mopane Complex in PEL 83 alone has the potential to contain significant volumes of hydrocarbons. Rhino Resources, in partnership with Azule Energy, NAMCOR, and Korres Investments, is currently drilling the first of two high-impact wells at PEL 85, while Petrobras is seeking farm-in opportunities offshore. Meanwhile, drilling activities are underway for the Kapana-1X well by Chevron and its joint venture partners NAMCOR and Trago in PEL 90,” Alweendo said.
Following its acquisition of an 80% operated interest in PEL 82, Chevron is pursuing play-opening discoveries within the Walvis Basin. PEL 82 includes more than 3,500 km² of 2D and 9,500 km² of 3D seismic data.
Additionally, Woodside Energy acquired the rights to PEL 87’s 3D seismic data in 2024, further testing additional opportunities within the prolific Orange Basin.
“These investments signal a strong commitment by leading international oil companies to unlock the full potential of Namibia’s offshore acreage. While the Shell write-down is unfortunate, the Ministry of Mines and Energy believes we have barely begun to scratch the surface of the country’s offshore resources. The Namibian government will continue working with dedicated companies to develop these resources, and our plans for first oil remain on track. We remain confident that ongoing exploration efforts will reveal commercial opportunities and look forward to delivering first oil production in the near future,” said Minister Alweendo.
