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Shell (RDS.A) Makes Oil & Gas Discovery Off Namibia's Coast

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Oil supermajor, Shell , has made a huge oil and gas discovery at a closely watched offshore well in the southern African nation of Namibia, an event that could lead to a series of investments in the country, per Reuters.

Resources estimated to be worth between 250 and 300 million barrels of oil and gas equivalent have been found at the Graff-1 well after Shell started drilling in the southern African country’s waters in December and the government of Namibia is expected to make an official announcement on this soon, sources told Reuters.

It is unclear if the discoveries are substantial enough for RDS.A to go ahead with the development of the country's first deepwater field, as further reported.

Although Namibia is not a fossil fuel producer, its northern neighbor, Angola, has significant offshore developments and is also a member of the Organization of the Petroleum Exporting Countries cartel.

Upstream, an Industry trade magazine, reported on the discovery at the Graff-1 well earlier this month, which said that results have so far shown at least two reservoirs containing what one of the sources described as a significant amount of oil and gas.

The discovery was reportedly made on the Petroleum Exploration Licence 39, owned 45 % by Shell, Qatar Petroleum having another 45% interest, with the remaining 10% owned by the National Petroleum Corporation of Namibia.

"We continue to safely execute Graff-1 operations", a Shell spokesperson said.

A statement by The Ministry of Energy and Mines of Namibia said it was in the final leg of a process to collect quality data for the Graff-1 well, enabling a "thorough assessment of the prospect potential". "As soon as all the data have been analyzed, the Ministry will issue a full results announcement," the government body added.

This particular finding comes as Shell starts to bring down its oil output as part of a plan to shift to renewable energy and low-carbon fuels. However, the company could still go for new field developments, which could act as an alternative to declining reserves and production elsewhere.

Namibia has tried to develop oil and gas fields for decades now but it has barely seen success. This is primarily due to the time-consuming and costly nature of such projects in countries with no existing energy infrastructure or regulation.

IHS Markit analyst, Hugh Ewan, said in a note after RDS.A started drilling Graff-1 back in December, "If successful, Graff-1 could spark significant international investment to a region which has had minimal E&P exploration and production activity over the last 25 years."

Shell is one of the primary oil supermajors, a group of U.S. and Europe-based big energy multinationals with operations spanning worldwide. The company is fully integrated as it participates in every aspect related to energy from oil production to refining and marketing.
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