Shell’s decision to write down approximately $400 million on an offshore oil discovery in Namibia has raised questions about the feasibility of the Southern African nation’s ambitions to become a significant oil producer. The discovery in block PEL39, made in 2022 in partnership with QatarEnergy and Namibia’s national oil company, initially spurred optimism. Alongside similar discoveries by TotalEnergies, it positioned Namibia as a potential new player in global oil markets, despite its lack of existing production.
Over the past three years, Shell drilled nine wells in the PEL39 block, leading to multiple hydrocarbon discoveries. However, technological challenges have stalled commercial development, as Shell recently confirmed that the resources in the block are not currently viable for extraction. While some industry analysts view this as a setback, Namibia’s Energy Minister, Tom Alweendo, sees it as a temporary hurdle.
Speaking at the International Renewable Energy Agency (IRENA) Assembly in Abu Dhabi, Alweendo emphasized that Shell’s decision does not signify an abandonment of Namibia’s oil and gas potential. “This is probably just a hump or a bump in the journey,” he stated, expressing confidence that advancing technologies would eventually enable the economic extraction of resources. Namibia remains committed to its goal of commencing oil production by 2029.
Beyond oil, Namibia has sought to diversify its energy investments, particularly in renewables and nuclear power. Already one of the world’s largest uranium producers, Namibia is pursuing partnerships with China to add value to its uranium reserves for peaceful nuclear energy development. President Nangolo Mbumba recently affirmed the country’s interest in nuclear energy, while Alweendo highlighted the need for stable baseload power sources, such as hydro, biomass, and nuclear, to support industrialization.
Namibia’s reliance on electricity imports underscores its energy challenges. Domestic generation supplies less than half of its consumption, leaving the country dependent on imports from South Africa, a nation grappling with its own energy crisis. Namibia’s power purchase agreement with South African utility Eskom is set to expire this year, adding urgency to its pursuit of energy independence and diversification.
Despite the recent setbacks, Namibia remains a focal point for global oil exploration. Chevron’s recent announcement of a non-commercial hydrocarbon find in the Kapana 1X well of the Orange Basin highlights both the challenges and potential of the region.While the find was not economically viable, Chevron noted that the geological insights gained from the well underscore the basin’s promise.
Such developments illustrate the duality of Namibia’s situation: technological and economic hurdles coexist with growing interest from major energy players. With companies like Shell, Chevron, and TotalEnergies actively exploring the region, Namibia’s offshore reserves are increasingly recognized as a critical frontier in Africa’s energy landscape.
As Namibia navigates these complexities, its leadership appears steadfast in its commitment to leveraging both its renewable and non-renewable resources. Alweendo’s optimism reflects a broader national strategy aimed at balancing immediate challenges with long-term ambitions. While technological innovations and favorable market conditions will be pivotal, Namibia’s position as a key player in Africa’s energy future seems increasingly assured.
For now, the setbacks represent growing pains rather than dead ends, as the country continues its march toward becoming a regional energy hub.
