Shell Namibia says the US$400 million write-down of its petroleum exploration license, PEL 39, is not a complete walkaway from the asset but rather a normal accounting procedure. 

This comes after reports that Shell has written down the resources, which spread like wildfire in the oil and gas industry.

The international reports said the decision by Shell would dash Namibia's hopes of becoming an oil and gas frontier.

Shell, along with its partners QatarEnergy and National Petroleum Corporation (Namcor) had initially sparked considerable interest in Namibia's oil potential following discoveries made in 2022.

The company has declared that the discovered oil and gas resources are currently deemed commercially unviable for development, marking a significant setback for Namibia's ambitions in the energy sector.

Namibia Shell's Country Chair, Eduardo Rodriguez, in an email, stated that the write-down is simply an accounting process and does not reflect the ongoing efforts in PEL0039.

The discovered resources, he says, cannot currently be confirmed for commercial development, and as such, it is required to classify them as "commercial—non-viable" and take a write-off of the capitalised well-spent. 

Rodriguez added that while hydrocarbons have been found in PEL 39, challenges such as resource mobility and a high gas-to-oil ratio make extraction difficult, combined with current market conditions.

These factors, he says, have prevented clear commercial opportunities that meet Shell's investment criteria. 

He emphasised that there are still potential additional opportunities in the area beyond the wells that have been drilled and written off and that Shell continues to evaluate exploration options with its partners in line with existing agreements and accounting policies.

Despite holding a 10% carried interest, Namcor stated that it faces no financial exposure from this decision. 

Its spokesperson, Utaara Hoveka, says the institution has not made any financial injection in the venture and that all risks associated with the exploration were taken on by Shell.

Hoveka remains confident that Namibia's full petroleum potential will be realised, as the country is a rich oil province that remains largely unexplored.

Over the past three years, Shell and its partners have drilled nine wells in the license area.