Shell pulls out of Namibia oil discovery

The logo of British multinational oil and gas company Shell is displayed during the LNG 2023 energy trade show in Vancouver. Source: Reuters/Chris Helgren

Shell and its partners QatarEnergy and Namibia's national oil company first discovered hydrocarbon in block PEL39 in 2022, which together with another discovery TotalEnergies made in a nearby block sparked huge global interest in the southern African country which has no oil and gas production.

Shell drilled nine wells in the licence over the past three years, making several other discoveries.

Galp Energia says Mopane oil field contains 10bn barrels

Sergio Goncalves  22 Apr 2024

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

But the British company encountered technical and geological difficulties for the development of the resources.

Hard rock

CEO Wael Sawan told analysts on 31 October 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 that it expects to take an exploration write off of around $400m, without providing details.

It will take another $300m write off related mainly to exploration licences in Colombia, the company said.