Shell will learn from Galp's huge Namibia discovery, as it...

Shell will learn from Galp's huge Namibia discovery, as it grapples with its own "complex" finds

"Chief executive Wale Sawan says neighbour's Mopane find offers "excellent data point" for Orange basin players

Shell is looking with keen interest at Galp Energia’s huge Mopane oil discovery in Namibia’s Orange basin to see what it can learn about prospectivity on its own exploration block immediately to the south, as it continues to grapple with its "complex" discoveries. Galp reported within the last week that Mopane holds in-place resources of 10 billion barrels of oil equivalent, after intercepting oil in three reservoirs. The Portuguese player did not identify the age of these reservoirs but revealed enough to conclude that at least one of these plays appears to be prolific in terms of its production capacity.

As a result, Shell and other big players in the basin such as Chevron, TotalEnergies and, potentially, Woodside, will be trying to trade well information with Galp or see what their exploration scouts can pick up on the Namibian grapevine that could be useful for their own drilling plans.

Shell chief executive Wael Sawan on Thursday told analysts: “I think the recent discovery from Galp adds some excellent data points for the overall basin. And those will be taken into consideration as we think about where we go next in our (drilling) programme. Importantly, we continue to study the results from many of our neighbouring blocks to be able to better inform our own choices.”

In the north of its block close to Galp’s licence, Shell last year drilled an unsuccessful well on a huge carbonate prospect called Cullinan. It will now likely take a fresh look at this northern area in the light of the Mopane find. While next-door neighbour TotalEnergies is talking about bringing on stream its Venus discovery via a 180,000-barrels-per-day floating production, storage and offloading vessel towards the end of this decade, and Galp is already eyeing a similar plan, Sawan said Shell is in no hurry. “We’re not in a race to put a (production) facility in place,” he said during the company’s first-quarter conference call, adding that the five discoveries Shell has made in its exploration licence are “complex". This is not a word that either TotalEnergies or Galp has used about their discoveries, which appears to underscore long-running talk in the exploration market that Shell’s finds — to date at least — will be more challenging to develop.

That there is a “significant volume” of oil “is clear”, said Sawan, but he stressed that the reservoirs intercepted so far are “complex in terms of porosities and permeabilities". As a result, he said it is “important” to ensure that “if we are to invest significant capital here, we want to be able to have sufficiently de-risked (the licence) and make sure we can deliver the sort of returns that our shareholders expect of us". “That's the mandate the team is working on… as quickly as they can, but with a clear objective.” Shell’s five discoveries in Namibia are Graff, La Rona, Lesedi, Jonker and Enigma, with Jonker expected to be the initial development target."