Shell has announced plans to write down around $400 million on its Namibian oil discovery, deeming it commercially unviable. This reduction in value will be reflected on the company’s financial statements.
Despite initial excitement over the 2022 discovery, Shell faced technical and geological challenges, including low rock permeability and high natural gas content. The company will take the write-off as part of its Q4 results on January 30.
According to a report by Reuters, citing sources within the company, oil and gas resources in offshore block PEL39 in Namibia “cannot currently be confirmed for commercial development.” Shell, along with its partners QatarEnergy and Namibia’s national oil company, first discovered hydrocarbon in block PEL39 in 2022.
Over the past three years, Shell drilled nine wells in the licence, making several other discoveries. Meanwhile, Portuguese oil company Galp made a major discovery in a different offshore licence. However, Shell encountered technical and geological difficulties in developing the resources.
CEO Wael Sawan told analysts on October 31 that Namibia’s acreage was “very challenging,” and that the lower permeability of the rock made extracting oil and gas harder.
Source: https://energynewsafrica.com
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