Namibia oil setbacks a chance to balance energy goals: experts
Shell’s $400 million write-off of an unviable oil discovery offshore signals challenges for Namibia’s crude production ambitions, yet allows it to balance energy goals with sustainable growth.

Oil giant Shell has written off approximately $400 million related to an oil discovery offshore Namibia that the company considered commercially unviable, which experts say will impact the country’s ambitions to become a crude producer.
The British international oil company told Reuters that the discovered oil and gas resources in offshore block PEL39 in Namibia “cannot currently be confirmed for commercial development.”
Shell and its partners — QatarEnergy and Namibia’s national oil firm — discovered oil and gas in block PEL39 back in 2022. This discovery, made alongside TotalEnergies in a nearby block, generated substantial global interest in Namibia, a country without oil and gas production.
Shell has drilled nine wells in the license area in the last three years, uncovering many new discoveries.
Recently, the Portuguese oil company Galp announced a large discovery in Namibia, which has a different offshore license. However, Shell faced technical and geological obstacles while developing the resources.
On Oct. 31, Shell CEO Wael Sawan told analysts that Namibia’s acreage was “very challenging” and that the rock’s lower permeability made extracting oil and gas more challenging.
Sources told Reuters that the offshore discoveries also had a high natural gas content, further complicating their development.
Namibia’s Ministry of Mines and Energy stated last week that Shell’s decision will not significantly impact Namibia’s oil and gas development. “It is not a setback. We are positive that the remaining potential of Petroleum Exploration Licence (PEL) 39 and other exploration campaigns will translate into commercial developments,” the ministry said in a statement.
Namibia is home to significant ultra-deep offshore light oil discoveries, with an estimated 10 billion barrels to date, which is on the scale of Guyana and other frontier hotspots. Several operators are currently at the appraisal stage for different fields, but none have reached a final investment decision.
Setback for Namibia’s crude ambitions
Quintin Simon, Country Manager of Aurex Constructors, said the withdrawal of a major international oil company (IOC) like Shell, especially in such a complex offshore environment, could signal a delay in development and raise concerns about the viability of the discoveries in ultra-deepwater and complex reservoir settings. He said the industry knows these types of reservoirs often require substantial capital, sophisticated technology, and long timelines to bring to production.
“The challenges around the cost and risk involved in these complex projects cannot be underestimated, and Shell’s exit could highlight the difficulties of achieving a final investment decision (FID) for such high-risk ventures.”
However, he firmly believes that Namibia will produce its first oil by 2029, saying that while the challenges are real — such as the ultra-deepwater nature of the discoveries and their intricate reservoir characteristics — each reservoir is unique.
Ekkehard Friedrich, Founder and Managing Partner of Shepherds Tree Investments, a Namibian strategy and transaction advisory firm, told Gas Outlook that Shell’s recent announcement highlights challenges for some of the more geologically intricate reserves, which may not be viable to develop.
He said other operators, such as Total and Galp, have more significant and geologically attractive discoveries. However, they have not announced their development plans as their exploration and appraisal campaigns are underway.
“So, there remains a very good chance that these will still go ahead, but expectations have of course been tempered. Also, note that the industry is new to Namibia and the country has very little supporting industry in place, making developing these resources in ultra-deepwater very expensive and more risky.
“Once supporting infrastructure is in place and other fields are operational, Shell’s field may yet be developed, albeit deemed non-commercial,” he added.
Energy transition
Friedrich said that Namibia should follow a “just transition” policy and develop all resources to aid the country’s development and reduce poverty. He emphasised that the large gas component of the discoveries will further aid the global energy landscape as a transition fuel and help balance out the intermittent nature of renewable energy sources, which is becoming increasingly apparent in Europe and other jurisdictions.
“Furthermore, I am of the firm belief that developing both industries in Namibia is complementary rather than mutually exclusive. Both industries require extensive and costly support industries and infrastructure.
“The same large cranes used to erect wind turbine masts can be used to unload large pieces of subsea infrastructure for an oilfield development. Modern pipelines are designed to carry not only natural gas but also hydrogen which paves the way for a smooth transition to green hydrogen exports once fully transitioned.
“It is important to note that very little large scale energy infrastructure exists at present in Namibia and that all energy projects would benefit from the development of the industry as a whole as Namibia aims to become a large scale exporter of energy and electricity,” he added.
Long-term energy security
Namibia’s energy sector is at a pivotal crossroads. Oil exploration and renewable energy initiatives offer significant opportunities for growth and development.
Simon reiterated that energy is critical to driving industrialisation, economic advancement, and overall national prosperity as a developing nation. He said the importance of a diverse and resilient energy mix cannot be overstated, especially as Namibia strives for long-term energy security and self-sufficiency.
“Namibia is in a unique and privileged position to develop a balanced energy mix that blends the best of both worlds—exploiting its oil and gas resources while concurrently establishing itself as a leader in green energy.
“The substantial investments in green hydrogen and solar energy are key components of the country’s broader vision to become a major global player in renewable energy. This commitment aligns with Namibia’s long-term goal to not only achieve energy independence but also position itself as an exporter of green energy to the rest of Africa, thereby diversifying its economy and reducing its carbon footprint.”
Simon said Namibia’s ability to balance its oil exploration ambitions with a robust commitment to renewable energy initiatives positions it to meet its domestic energy needs and emerge as a global leader in the green energy transition.
“By leveraging its natural resources, embracing innovation, and investing in a diversified energy portfolio, Namibia is well on its way to achieving long-term energy security and contributing to the global energy transformation,” he concluded.