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Exclusive-Shell hits oil and gas in Namibian offshore well

01/25/2022 | 05:42am EDT
FILE PHOTO: The Royal Dutch Shell logo is seen at a Shell petrol station in London

LONDON (Reuters) - Shell has made a significant oil and gas discovery at an closely-watched offshore well in Namibia which could spark a wave of investment in the southern African country, three industry sources told Reuters.

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

It unclear if the discoveries are big enough for Shell to go ahead with the development of the country's first deep water field, the sources said.

The Namibian government is planning to make an announcementnext week on the details of the discovery at the Graff-1 wellwhich Shell started drilling last month, according to two of thesources. The well results have so far shown at least two reservoirscontaining what one of the sources described as a significant amount of oil and gas. According to a second source, the drilling results haveshown one layer at least 60 metres deep of hydrocarbons,holding an estimated 250 to 300 million barrels of oil and gas equivalent. Shell holds a 45% stake in the offshore Petroleum Exploration License 39 (PEL 39) with a 45% interest held by Qatar Petroleum and a 10% held by the National Petroleum Corporation of Namibia (NAMCOR). A Shell spokesperson said: "We continue to safely executeGraff-1 operations."

Namibia's Petroleum Commissioner declined to comment.

The discovery comes as Shell begins winding down its oilproduction as part of a plan to shift to renewable energy andlow-carbon fuels. But even so, the company could opt to developa new field to replenish its reserves and replace production declines elsewhere. Developing new oil and gas fields in a country with no existing energy infrastructure and regulation, similar to what has happened in Guyana on the other side of the Atlantic in recent years, is timely and costly. Namibia has sought to develop oil and gas fields for decadeswith no success. But in recent years interests in its offshore prospects haveattracted many foreign companies including Exxon Mobil and TotalEnergies following discoveries in neighbouring South Africa as well as Brazil and Guyana which share geological similarities. "If successful, Graff-1 could spark significantinternational investment to a region which has had minimal E&Pexploration and production activity over the last 25 years," IHSMarkit analyst Hugh Ewan said in a note after Shell started drilling Graff-1 in December.

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

(Reporting by Ron Bousso and Wendell Roelf; editing by David Evans)

By Ron Bousso and Wendell Roelf

© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
EXXON MOBIL CORPORATION 0.54% 91.14 Delayed Quote.48.15%
TOTALENERGIES SE -1.25% 51.53 Real-time Quote.16.92%
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