Namibian oil sector hiccough

Ministry of Mines and Energy responds to Shell's Orange Basin write-down

NAMIBIA: The Ministry of Mines and Energy (MME) does believe that Shell’s decision to write-down $400 million on oil discoveries in a licence held in the Orange Basin will significantly impact Namibia's oil and gas development.

“It is not a setback. We are positive that the remaining potential of PEL39 and other exploration campaigns will translate into commercial developments. Shell’s discoveries in PEL 39 represent just some of the many exploration milestones witnessed offshore Namibia since 2022,” they said in a statement issued yesterday.

“It is not a setback. We are positive that the remaining potential of PEL39 and other exploration campaigns will translate into commercial developments.”

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 PEL39.

Since the initial discovery at the Graff-1X well in 2022, Shell has drilled eight wells at PEL 39, with various wells encountering hydrocarbons. PEL 39 is situated 250 km in deep-offshore acreage, comprising an area of more than 12,000 km².

While initial assessments of some of the subsurface parameters indicated challenges related to subsurface complexities and reservoir quality, it is still believed that there is significant potential for improvement as exploration and technical analysis continues.

The MME says that advances in technology, coupled with further geological and geophysical studies are expected to provide deeper insights and unlock the full potential of these resources.

Remaining committed to developing the resources based on collective discoveries from nine drilled wells, the government of Namibia notes that these amount to significant volumes of hydrocarbons.

“We are dedicated to progressing these opportunities with the right partner and right investment commitment.”

TotalEnergies, for example, is making progress with its multi-well appraisal and exploration drilling campaign in Block 2913B, situated in PEL 56. The company aims to make a Final Investment Decision in 2025, with first oil targeted for 2029.

Concurrently, Galp seeks to bring in another partner on the Mopane complex, following two discoveries at the Mopane-1X and its successful appraisal in Mopane-2A well in 2024. The Mopane complex in PEL 83 alone has been cited having the potential to contain significant volumes of hydrocarbons in place.

Rhino Resources, in partnership with Azule Energy, NAMCOR and Korres Investments - are busy drilling the first of the two high-impact wells at PEL 85 currently, while Petrobras is seeking farm-in opportunities offshore.

At the same time, drilling activities are underway for the Kapana 1X well by Chevron and its joint venture partners Namcor and Trago in PEL90.

Following its acquisition of an 80% operated interest in PEL 82, Chevron is seeking play-opening discoveries within the Walvis Basin. PEL 82 features more than 3,500 km² of 2D and 9,500 km² of 3D data. Additionally, Woodside Energy gained the rights to PEL 87 3D seismic data in 2024 which will further test the additional opportunities within the prolific Orange Basin.

“These investments signal a strong commitment by leading international oil companies to unlock the full potential of Namibia’s offshore acreage. While the Shell write down is unfortunate, the Ministry of Mines and Energy believes that we have barely begun to scratch the surface of the country’s offshore resources.

“The Namibia government will continue working with dedicated companies to develop these resources and our plan to first oil are still on track. We remain confident that ongoing exploration efforts will reveal commercial opportunities and look forward to delivering first oil production in the near future,” states Tom Alweendo, Minister of Mines and Energy, Namibia.

STATEMENT ON NAMCOR POSITION ON PEL Block 39:
The National Petroleum Corporation of Namibia (NAMCOR) hereby outlines its position on Petroleum Exploration License (PEL) 39.
Since 2022 the PEL 39 Joint Venture (JV) partners have drilled six exploration wells and three appraisal wells across the PEL 39 license area. Throughout this period, extensive data indicating significant hydrocarbon prospectivity within the license blocks has been collected. However, despite these promising findings, challenges such as ultra-deepwater conditions and reservoir complexities remain associated with these discoveries.
In light of the above developments, the PEL 39 JV partners are actively evaluating pathways for further exploration and appraisal activities to assess the potential for oil and gas development in the license block, in line with existing agreements.
In addition, NAMCOR together with its JV partners TotalEnergies (Operator), QatarEnergy, and Impact Oil and Gas Namibia (Pty) Ltd in PEL 56, are currently progressing with extensive post-well studies from the Venus wells, which will continue through 2025.
Following the completion of the Venus main area appraisal campaigns, the JV partners are now prioritising studies aimed at fast-tracking the potential development of the Venus discovery.
NAMCOR remains optimistic about the hydrocarbon potential of the Orange Basin and the broader offshore Namibia.