Oil has become the great hope of several poorly developed countries that, with the help of technology and foreign investment, have recently made large oil discoveries. What’s more, currently, the large discoveries of crude oil They are no longer made in Saudi Arabia, Russia or the US (large producers), are almost always produced in ‘lost nations’ for the eyes of the developed world that have been little explored with current technology. A good example is the case of Namibia, an African country where several oil discoveries have been made in the last two years. Two of these finds have been really important (with several billion barrels). To the ‘misfortune’ of the country’s economy, the oil company Shell has announced this week that its great oil discovery has a big problem: the rock is poorly permeable and the crude oil found may never be commercially viable. This means that it is possible that oil cannot be extracted at competitive prices to be sold and exported. This undoubtedly represents a serious blow to the expectations of this African country.
Namibia is a vast nation (in area, since it only has 2.6 million inhabitants) known for its desert landscapes and biodiversity. However, in recent years it has captured the attention of the energy world due to the discoveries of important oil reserves on its coasts. One of the most important findings is being reviewed after the news that Shell has decided to depreciate the project in the PEL39 block by 400 million dollarsconsidering it “commercially unviable”, which has been a setback for the country’s aspirations to become a leading oil producer.
The discovery in question, made in 2022 by Shell, QatarEnergy and Namibia’s national oil company, generated great global interest along with another significant discovery by TotalEnergies in a nearby block (Galp has later made several crude finds in the same basin , but in different blocks). Both promised to position Namibia as an emerging player in the energy sector. According to Reuters, the findings raised expectations that the country could take advantage of its natural resources to diversify its economy.
Despite initial progress, Shell has faced significant technical and geological challenges. In a statement, the company acknowledged that “the discovered resources cannot currently be confirmed for commercial development.” Difficulties include low rock permeability and high natural gas content, factors that complicate oil and gas extraction in the area.
A path full of technical challenges
Shell CEO Wael Sawan described conditions in Namibia as “very challenging”, highlighting that the geological characteristics of the offshore blocks pose additional complications. According to Reuters, Shell has drilled nine wells on the PEL39 license in the last three yearsmaking several discoveries, but none of them have been considered viable for immediate commercial development.
The Venus block, managed by TotalEnergies, is also under global scrutiny, with the company planning to make a final investment decision by the end of this year. These initiatives keep hope alive that Namibia can overcome technical challenges and harness its oil potential.
Optimism from the Namibian government
Despite Shell’s decision, Namibia’s Ministry of Mines and Energy downplayed the impact of this setback. “It is not a setback,” he said in a statement. “We are positive about the remaining potential of the PEL39 block and other exploration campaigns”. This stance reflects the country’s commitment to press ahead with its ambition to become a key oil producer.
Other large companies, such as Chevron, Galp, and Azule Energy – a joint venture of Eni and BP – are also betting on Namibia, with plans to drill exploration wells this year. These initiatives demonstrate that interest in the Namibian coast remains high, despite the current challenges.
An opportunity for the country
Namibia has a lot at stake in its oil aspirations. With reserves estimated at 2.6 billion barrels, according to Reuters, The country could diversify its economy and generate significant income if it can overcome technical obstacles. However, the development of the oil industry also raises questions about sustainability and equity in the distribution of economic benefits.
The lack of oil production to date has limited the impact of these resources on the local economy. But with recent discoveries and new players entering the scene, Namibia has the opportunity to transform its economic and social landscape. Shell’s experience highlights the need for international collaboration and technological advances to unlock Namibia’s potential. “We are exploring additional opportunities and working with our partners to identify viable commercial paths”the company said in a statement.
For its part, the discovery of Galp in another license offshore shows that there is still room for optimism. While the geological features are challenging (they could look very similar to what Shell has published), the data collected so far suggests that Namibia’s potential should not be underestimated.
Namibia’s future in the energy sector
Despite everything, Namibia is in a unique position. Its oil reserves could make it a key player in the energy market, especially at a time when global demand remains high. However, the path to commercial production will require significant investments, advanced technology and a strategic vision on the part of the government and the companies involved.
Namibia’s oil potential could not only boost its economy but also position the country as a model for other African nations in terms of natural resource management. If it manages to balance economic development with environmental sustainability, Namibia could become a relevant player in the energy sector at an African and global level.
Currently, the largest oil producers in Africa are Nigeria, Libya and Angola. The truth is that none of these three countries has achieved a notable level of development despite the great wealth contained in their subsoil and waters. Oil management in countries with little stability and weak institutions often becomes a source of conflict instead of being a source of wealth and opportunity.
An oil dream under construction
Despite current challenges, Namibia remains a promise on the global energy map. The investment decisions of companies such as TotalEnergies, Chevron and Galp in the coming years They will be key to determining the future of this nation. Meanwhile, the government and its international partners are working to transform these discoveries into a commercial reality that benefits all Namibians.
Namibia’s story in the energy sector is far from over. With perseverance, innovation and cooperation, this southern African country could go from being a contender to becoming a key oil producer, marking a milestone in its economic development and the region’s energy landscape.
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