Namibia: Shell reduces the value of an oil discovery

Oil major Shell has decided to write down around $400 million following an in-depth analysis of the commercial viability of its oil discovery in offshore block PEL39, off the coast of Namibia. This decision represents a significant setback for Namibia's ambitions to position itself as a new player in the global crude oil industry.

In a statement to Reuters, Shell said that the resources identified in block PEL39 "cannot currently be confirmed for commercial development". This conclusion reflects the results of extensive technical and economic assessments, suggesting that the cost and risks of operating the project would outweigh the benefits expected in the current environment.

Namibia, rich in promising offshore prospects, had seen the discovery as a major opportunity to strengthen its economy and attract more investment in the energy sector. However, Shell's decision could dampen the enthusiasm of potential investors and slow the country's efforts to become a major oil producer.

This announcement comes at a time when the major oil companies are reassessing their asset portfolios in the light of economic, environmental and regulatory pressures. The focus on energy transition is driving these companies to favour projects that offer a better balance between profitability and environmental impact.

Despite this decision, Shell may be considering future options for the PEL39 block, including collaborations with other industry players or technological advances that could make the project more viable. For the time being, however, no concrete indication has been given of potential next steps.

This depreciation highlights the challenges facing oil companies in a constantly changing environment, marked by economic uncertainties and an accelerated energy transition. For Namibia, the challenge remains to continue to explore and develop its energy potential while attracting long-term investment.