Shell will incur a write-off of approximately $400 million due to an oil discovery off the coast of Namibia, which it has determined to be commercially unfeasible. This setback poses a challenge to Namibia's ambitions to establish itself as a crude oil producer.

In a statement to Reuters, Shell indicated that the oil and gas resources identified in offshore block PEL39 cannot be confirmed for commercial development at this time.

The hydrocarbon resources in block PEL39 were initially discovered in 2022 by Shell, QatarEnergy, and Namibia’s national oil company. This discovery, along with another made by TotalEnergies in a nearby block, generated significant global interest in Namibia, a country that currently lacks oil and gas production.

Over the past three years, Shell has drilled nine wells within the license area, resulting in several additional discoveries.

Recently, Portuguese oil company Galp also reported a significant find in a separate offshore license.

However, Shell faced technical and geological challenges in developing these resources. CEO Wael Sawan noted on October 31 that the geological conditions in Namibia are "very challenging," with the rock's lower permeability complicating the extraction of oil and gas.

Sources informed Reuters that the offshore discoveries also contain a high proportion of natural gas, which further complicates their development.

In a trading update prior to its fourth-quarter results scheduled for January 30, the company announced its expectation of a $400 million exploration write-off, although specific details were not provided. Additionally, Shell anticipates a further $300 million write-off primarily related to exploration licenses in Colombia.