Shell, which earlier this year recorded a US$400 million write-down on its Orange Basin discoveries — Graff, La Rona, and Jonker — due to low permeability, high gas content, and other technical hurdles, has announced plans to drill five new exploration wells in Namibia’s offshore Orange Basin in 2026.
A Shell spokesperson said to S&P Global Commodity Insights, now Platts, last month that, “We are progressing plans to conduct further exploration drilling activity in PEL 39 during 2026 to continue our evaluation of the prospectivity.”
Shell holds a 45 per cent stake in PEL 39, with QatarEnergy holding 45 per cent and Namcor holding 10 per cent.
The PEL 39 block lies adjacent to TotalEnergies’ Venus field and Galp’s Mopane discovery.
Namibia has set a target of producing oil by 2030.
Shell’s Graff and Jonker accumulations are estimated to contain recoverable oil reserves of approximately 200 million barrels and 300 million barrels, respectively.
Graff further holds total reserves of around 300 million barrels of crude oil and about 340 million barrels of oil equivalent in reserves.
Despite these large numbers, Shell deemed the discoveries commercially unviable. The rock quality was poor, with low permeability preventing oil from flowing at economic rates.
The gas-to-oil ratios were higher than expected, complicating production and reducing the net oil output. The deepwater setting, at more than 2,500 metres, would require expensive subsea infrastructure and floating production facilities.
For a company like Shell, fields of this size with such technical challenges fall below its commercial thresholds.
These factors explain why Shell wrote down Graff and Jonker, even though headline resource estimates appeared substantial.
Although Shell has not specified why it is returning, it could be that other parts of PEL 39 contain different geological settings with better reservoir quality than those of Graff and Jonker.
It could also be that future discoveries may be aggregated with existing finds into a single hub development, reducing costs and improving commercial viability. The proximity of Shell’s acreage to TotalEnergies’ Venus and Galp’s Mopane fields may also be a factor, since shared infrastructure could make projects more economic.
In addition, Shell may be positioning itself for future changes in oil prices, technology, or market conditions that could shift project economics in its favour.
In 2022 Shell announced the Graff-1 discovery, followed by La Rona and Jonker.
In 2023 and 2024 appraisal drilling confirmed high gas-to-oil ratios and low reservoir permeability. In January 2025, Shell took a US$400 million write-down on its Namibian assets.
