A major setback has struck Namibia’s aspirations to join the ranks of oil-producing nations as energy giant Shell announces the commercial unfeasibility of its offshore discoveries. The company plans to write down approximately $400 million invested in the promising PEL39 block, dealing a significant blow to the southern African nation’s economic ambitions.
The decision follows an extensive three-year exploration campaign during which Shell and its partners, including QatarEnergy and Namibia’s national oil company, conducted nine drilling operations, reported Reuters, adding that despite multiple discoveries since the initial finding in 2022, technical challenges have proven insurmountable for commercial development.
Geological complications, particularly the rock formation’s low permeability, have created substantial obstacles for resource extraction. The high natural gas content in the offshore discoveries has further complicated development prospects, making the project commercially unviable under current conditions.
The announcement represents a significant setback for Namibia, which has never produced oil or gas commercially. The country had attracted considerable international attention following Shell’s initial discovery and similar findings by other energy companies in nearby blocks, including recent success by Portuguese firm Galp in a different offshore license.
The company’s retreat from Namibia coincides with additional write-offs, including $300 million related to exploration licenses in Colombia, reflecting broader challenges in new oil field development.