Shell’s $400 Million Impairment: A Financial Adjustment, Not an Exit
In a significant development for Namibia’s oil and gas sector, Shell has clarified that its recent $400 million impairment linked to its offshore oil discovery is a strategic financial decision rather than a retreat from the country. The impairment, connected to challenges in finding a commercially viable extraction pathway, follows a broader $649 million impairment in exploration well investments for the final quarter of 2024.
Despite the write‑off, Shell remains committed to Namibia’s future. CEO Wael Sawan emphasised that while current geological challenges, including low rock permeability and high natural gas content, have impeded immediate commercialisation, the company continues to assess long‑term opportunities.
“We have a significant amount of data to work with. But suffice it to say, at this stage, we haven’t identified a commercial pathway, which is why the impairment was triggered. If things change, we might reassess, but for now, this is the prudent way forward,” said Sawan.
Shell, in partnership with QatarEnergy and Namibia’s national oil company, initially discovered hydrocarbons in Block PEL39 in 2022. However, after drilling nine wells over three years, the project has encountered technical challenges that have stalled development.
Minister of Mines and Energy Tom Alweendo acknowledged the setback but reaffirmed Namibia’s potential as an emerging oil player, citing continued investor confidence in the country’s hydrocarbon reserves. According to the Bank of Namibia, the sector has attracted N$33.4 billion in foreign direct investment (FDI) between 2021 and 2023.
Supernova Expands into Namibia’s Orange Basin
Supernova Energy has completed a strategic acquisition, securing a 70% stake in Petroleum Exploration Licence (PEL 107) in the Orange Basin, a region renowned for its untapped oil and gas reserves. The acquisition, facilitated through a share exchange agreement, involves Supernova acquiring NamLith’s outstanding shares in exchange for 15 million common shares, subject to phased release conditions.
“This acquisition marks a significant step in Supernova’s strategy to expand its presence in the offshore petroleum sector. The Orange Basin offers promising growth potential, and we are eager to capitalise on NamLith’s stake in Westoil,” said Supernova CEO Sean McGrath.
Under the terms of the agreement, shares will be unlocked in stages tied to exploration and technical reporting milestones, ensuring strategic alignment with Supernova’s long‑term objectives. The company emphasised that the acquisition does not alter its governance structure or management team.
Azule Energy Advances Angola’s Gas Sector, Expands in Namibia
In a major offshore development, Azule Energy, in partnership with Sonangol E&P, Chevron, and TotalEnergies, has successfully completed the Quiluma and Maboqueiro offshore platforms—critical components of Angola’s first non‑associated gas project under the New Gas Consortium (NGC). The initiative aims to enhance Angola’s energy security by supplying gas to the Soyo LNG plant.
“Today’s milestone reflects the collaborative spirit, technical expertise, and dedication of all partners involved. As we prepare for NGC First Gas, this project reaffirms our commitment to unlocking Angola’s energy potential and contributing to a sustainable energy future,” said Alister Forder, COO of Azule Energy.
Azule Energy has also strengthened its foothold in Namibia, finalising the acquisition of a 42.5% stake in Block 2914A (PEL85) in the Orange Basin. The company, a joint venture between bp and Eni, aims to expand production to 250,000 barrels of oil equivalent per day over the next four years.
Galp Energia’s Namibia Investments Reach N$6 Billion
Portuguese energy giant Galp Energia has reported a total investment of N$6 billion (€312 million) in Namibia in 2024, with a focus on exploration and appraisal activities. The investment forms part of the company’s broader upstream strategy, which also includes major projects in Brazil.
Galp’s fourth‑quarter financial report indicated a total net capital expenditure (capex) of €832 million, with economic capex reaching €1.29 billion. The company’s Namibia‑related expenditures were primarily allocated to Petroleum Exploration Licence 83 (PEL 83) in the Orange Basin.
“Capex totalled €1.29 billion, with Upstream and Industrial accounting for 59% and 18% of total investments, respectively, whilst Commercial and Renewables businesses represented the remaining,” the report stated.
While Galp experienced a year‑on‑year decline in EBITDA due to lower production and increased exploration costs in Brazil and Namibia, the company maintained a strong financial position, reducing net debt to €1.2 billion. Galp holds an 80% stake in PEL 83, covering an area of nearly 10,000 square kilometres in Namibian waters near the South African border. The firm remains committed to its exploration efforts, despite ongoing economic challenges.
ReconAfrica Progresses in the Kavango Basin
ReconAfrica has reported significant advancements in its exploration efforts within the Kavango Basin, with its most recent well data indicating promising signs of a working petroleum system. The Canadian‑based firm has been conducting extensive seismic surveys and has begun preparations for its next phase of drilling.
CEO Scott Evans emphasised the importance of continued investment in the region, noting,
“We remain committed to understanding the full potential of the Kavango Basin. Our recent findings are encouraging, and we look forward to sharing further updates as we progress.”
The Namibian government has reiterated its support for responsible oil and gas exploration while ensuring environmental sustainability and regulatory compliance.
Conclusion
While Shell’s impairment represents a financial recalibration, industry players remain bullish on Namibia’s offshore potential. The Orange Basin continues to attract global interest, with Supernova, Azule Energy, and Galp Energia making significant strategic moves. As exploration efforts progress, Namibia remains poised to emerge as a key player in the global energy landscape.
Written by Ian Coffee, Branch Manager, IBN Immigration Solutions Namibia
Edited by Simon Carletti, PR and Creative Supervisor
