Namcor bullish despite Shell’s mixed confidence
Nine wells produce lacklustre results
The national oil company says despite the setback, Namibia remains an underexplored oil province.
The National Petroleum Corporation of Namibia (Namcor) remains optimistic about the country’s oil potential despite British multinational Shell's decision to write down approximately $400 million (N$7.5 billion) over a Namibian deposit it deemed commercially unviable.
Namcor, a carried partner in Shell’s Block Petroleum Exploration Licence (PEL) 39, emphasized that it would not bear any financial risk from the write-down.
Namcor spokesperson Utaara Hoveka clarified the company’s position, stating that Shell had not formally communicated the write-down or its potential impact on Namcor.
“As a partner, we have not received any formal communication from Shell concerning the conclusive outcome on the commercial viability of Block PEL 39. Secondly, 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 by the operator,” Hoveka said.
A write-down refers to the reduction of an asset’s book value when its fair market value (FMV) falls below its carrying book value, rendering it an impaired asset.
Namibia’s potential remains untapped
Despite Shell’s decision, Namcor remains confident in Namibia’s untapped potential as an oil producer.
“We remain firm in our conviction that Namibia is a rich, underexplored oil province. With more hydrocarbon exploration activities, the country’s full petroleum potential will certainly be realized,” Hoveka added.
Shell’s write-down follows nine wells drilled in the block over the past three years, which yielded several discoveries but faced technical and geological challenges. Shell CEO Wael Sawan highlighted difficulties, noting that the lower permeability of the rock complicates oil and gas extraction.
Galp’s leadership shakeup
Meanwhile, Portuguese oil company Galp Energia, another Namcor exploration partner, announced a significant oil discovery in a separate offshore licence. However, Galp CEO Filipe Silva’s sudden resignation on Tuesday has raised concerns about the company’s planned partnership with ExxonMobil on Block PEL82.
The proposed deal would see ExxonMobil and Galp each holding 40% stakes in PEL82, with Namcor and Custos each retaining 10%. Custos Chairman Knowledge Katti celebrated Galp’s latest discovery in the second PEL82 well but did not comment on the leadership changes.
Namcor has yet to respond to inquiries about the potential impact of Galp’s leadership developments on future projects.
Industry implications
Shell’s decision marks a setback in Namibia’s aspirations to become a crude oil producer. Mines and Energy Minister Tom Alweendo was unavailable for comment.
Namibia’s energy sector continues to draw interest from global oil players despite challenges, as stakeholders emphasise the country’s long-term potential in hydrocarbon exploration. - (Additional reporting by Ogone Tlhage and Augetto Graig)
Namcor, a carried partner in Shell’s Block Petroleum Exploration Licence (PEL) 39, emphasized that it would not bear any financial risk from the write-down.
Namcor spokesperson Utaara Hoveka clarified the company’s position, stating that Shell had not formally communicated the write-down or its potential impact on Namcor.
“As a partner, we have not received any formal communication from Shell concerning the conclusive outcome on the commercial viability of Block PEL 39. Secondly, 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 by the operator,” Hoveka said.
A write-down refers to the reduction of an asset’s book value when its fair market value (FMV) falls below its carrying book value, rendering it an impaired asset.
Namibia’s potential remains untapped
Despite Shell’s decision, Namcor remains confident in Namibia’s untapped potential as an oil producer.
“We remain firm in our conviction that Namibia is a rich, underexplored oil province. With more hydrocarbon exploration activities, the country’s full petroleum potential will certainly be realized,” Hoveka added.
Shell’s write-down follows nine wells drilled in the block over the past three years, which yielded several discoveries but faced technical and geological challenges. Shell CEO Wael Sawan highlighted difficulties, noting that the lower permeability of the rock complicates oil and gas extraction.
Galp’s leadership shakeup
Meanwhile, Portuguese oil company Galp Energia, another Namcor exploration partner, announced a significant oil discovery in a separate offshore licence. However, Galp CEO Filipe Silva’s sudden resignation on Tuesday has raised concerns about the company’s planned partnership with ExxonMobil on Block PEL82.
The proposed deal would see ExxonMobil and Galp each holding 40% stakes in PEL82, with Namcor and Custos each retaining 10%. Custos Chairman Knowledge Katti celebrated Galp’s latest discovery in the second PEL82 well but did not comment on the leadership changes.
Namcor has yet to respond to inquiries about the potential impact of Galp’s leadership developments on future projects.
Industry implications
Shell’s decision marks a setback in Namibia’s aspirations to become a crude oil producer. Mines and Energy Minister Tom Alweendo was unavailable for comment.
Namibia’s energy sector continues to draw interest from global oil players despite challenges, as stakeholders emphasise the country’s long-term potential in hydrocarbon exploration. - (Additional reporting by Ogone Tlhage and Augetto Graig)
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