"Shell’s top executive has reiterated that the company remains on the lookout for “opportunities” in Namibia despite earlier this month taking a $400 million write-down on its exploration efforts in the country’s prolific, but challenging, Orange basin. The write-down was taken because the UK-based supermajor could see no commercially viable route to exploit the oil and gas resources found in five discoveries — Jonker, Enigma, Graff, La Rona and Lesedi. Shell said subsurface issues linked to porosity, permeability and associated gas were key factors in declaring non-commerciality.
In response, Namibia’s government quickly refuted the claim that the discoveries in Petroleum Exploration Licence (PEL) 39 were uneconomic, saying it would exploit these resources with “the right partner”. Asked to elaborate on Shell’s thinking on Namibia, chief executive, Wael Sawan, on Thursday told analysts: “There is no doubt that in Namibia there is a lot of oil. The reason for the impairment is more to do with our inability to be able to find a commercial pathway to be able to monetise that resource." However, speaking on the company’s fourth-quarter results call, he stressed that this write-down may not be the end of the road for the supermajor in Namibia. "Who knows? If things change, there will be a different view. That [write-down] in no way means that there won't be opportunities, and we continue to look at those.”
Sawan added: “We continue to do our own analysis of the data that we have... we have a lot of data,” and he highlighted how there is a lot of drilling happening in neighbouring blocks. This was a reference to TotalEnergies, Galp Energia and Rhino Resources all being close to completing exploration wells in acreage west, north and east — respectively — of PEL 39. Rhino is understood to be close to wrapping up its Sagittarius-1X well on PEL 85, while Galp is nearing the end of its Mopane-3X probe in PEL 83. TotalEnergies is also coming to the end of its Tamboti-1X well on PEL 59, which was targeting a billion-barrel resource and is known to have made a discovery. However, two sources familiar with the French giant's well have told Upstream that Tamboti may be smaller than hoped for, although a resource of 1 billion barrels could still be on the cards if combined with last year's Mangetti discovery. Once Galp completes its current drilling campaign in PEL 83, it is expected to revive a farm-out process that began last year, which attracted the interest of Petrobras and other major players."
PCL Price at posting:
1.8¢ Sentiment: Buy Disclosure: Held
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