African Reserves

EXCLUSIVE Shell hits oil and gas in Namibian offshore well

  • Shell has made a “significant” discovery in the Graff-1 well
  • The Namibian government will hold a press conference on the discovery
  • It remains unclear whether Shell will develop a field

LONDON, Jan 25 (Reuters) – Shell (RDSa.L) has made a major oil and gas find in a closely guarded offshore well in Namibia that could spark a wave of investment in the southern African country, Three industry sources told Reuters.

Namibia is not a fossil fuel producer, although its northern neighbor Angola is a major oil and gas producer and a member of the Organization of the Petroleum Exporting Countries.

It is unclear whether the discoveries are significant enough for Shell to pursue development of the country’s first deepwater field, the sources said.

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The Namibian government plans to make an announcement next week on the details of the discovery of the Graff-1 well that Shell started drilling last month, according to two of the sources.

Well results have so far shown at least two reservoirs containing what one of the sources described as a significant amount of oil and gas.

According to a second source, drilling results showed a layer of hydrocarbons at least 60 meters deep, containing around 250 to 300 million barrels of oil and gas equivalent.

Shell holds a 45% stake in offshore oil exploration license 39 (PEL 39) with a 45% stake held by Qatar Petroleum and a 10% stake held by the National Petroleum Corporation of Namibia (NAMCOR).

A Shell spokesperson said: “We continue to safely execute Graff-1 operations.”

The Namibian Petroleum Commissioner declined to comment.

The discovery comes as Shell begins to cut oil production as part of a plan to transition to renewable energy and low-carbon fuels. But even so, the company could choose to develop a new field to replenish its reserves and replace production declines elsewhere.

Developing new oil and gas fields in a country lacking energy infrastructure and regulation, like what has happened in Guyana across the Atlantic in recent years, is timely and expensive.

Namibia has sought to develop oil and gas fields for decades without success.

But in recent years, interest in its offshore prospects has attracted many foreign companies including Exxon Mobil (XOM.N) and TotalEnergies (TTEF.PA) following discoveries in neighboring South Africa as well as Brazil and Guyana which share geological similarities.

“If successful, Graff-1 could spur significant international investment in a region that has had minimal E&P exploration and production activity over the past 25 years,” said IHS Markit analyst Hugh Ewan. , in a note after Shell began drilling Graff-1 in December.

TotalEnergies began drilling the Venus-1 exploration well in nearby Block 56 in December at a depth of 3,000 meters.

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Reporting by Ron Bousso and Wendell Roelf; edited by David Evans

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