Alweendo: Oil search barely scratched surface of Namibia’s true potential

Oil search in Namibia has barely scratched the surface of the country’s true potential as a leading producer, energy minister Tom Alweendo said in response to news to plans by oil and gas giant Shell to write down US$400 million (N$7.6 billion) in its Petroleum Exploration License (PEL) 39 well.A write-down occurs when an asset's book value is reduced due to its fair market value falling below its carrying book value, classifying the asset as impaired. Shell recently announced that the hydrocarbon resources discovered in PEL 39, situated offshore Namibia, "cannot currently be confirmed for commercial development."Reacting to this announcement, Alweendo reaffirmed that Shell’s decision does not hinder Namibia's march towards becoming a future oil and gas producer.“The ministry of mines and energy emphasises 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 are positive that the remaining potential of PEL 39 and other exploration campaigns will translate into commercial developments,” he said.Alweendo highlighted that Shell's findings in PEL 39 are only a fraction of the significant exploration successes offshore Namibia since 2022.Continued explorationShell, alongside its partners Qatar Energy and the National Petroleum Corporation of Namibia (Namcor), remains committed to exploring further opportunities within PEL 39, despite challenges that have rendered some discoveries commercially unfeasible.“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,” Alweendo stated.Shell has drilled eight wells in PEL 39 since its initial discovery at the Graff-1X well in 2022, with several wells encountering hydrocarbons. The license covers over 12,000 square kilometers and lies 250 kilometers offshore.Potential for growthWhile some technical and subsurface complexities, including lower rock permeability, have posed challenges, Alweendo remains optimistic. Advances in exploration technology and ongoing geological studies could unlock the resources' full potential.“The collective discoveries from the nine drilled wells amount to 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 partner and right investment commitment,” Alweendo said.Industry perspectiveShell CEO Wael Sawan acknowledged the challenges, citing the rock's lower permeability as a complication in oil and gas extraction. However, Shell’s continued drilling history underscores confidence in Namibia as a burgeoning oil and gas frontier, with substantial untapped potential waiting to be unlocked.

Alweendo: Oil search barely scratched surface of Namibia’s true potential

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Namibian Sun 2025-02-24

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Alweendo: Oil search barely scratched surface of Namibia’s true potential

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Namibian Sun 2025-02-24

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