Shell has made a significant oil and gas discovery offshore Namibia, one of the expected hotspots for exploration this year, Reuters reported on Tuesday, quoting three sources in the industry.
Shell, which started drilling the Graff-1 well in Namibia's waters in December, has found resources estimated at 250-300 million barrels of oil and gas equivalent, one of the sources told Reuters.
The government of Namibia is expected to make an announcement next week, two sources said.
Namibia does not produce oil and gas, but the offshore area around it is thought to hold a lot of resources, and analysts believe it would be one of the top high-impact exploration hotspots this year. Namibia's neighbor to the north is OPEC producer Angola, which has a lot of offshore developments.
"Namibia is again under the spotlight as Shell bank on the highly anticipated Graff-1 to unlock frontier plays in the Orange Sub-basin," Erik Meyer and Hugh Ewan, Senior Technical Research Analysts at IHS Markit, said in a note just after Shell spud the Graff-1 well in December.
"If successful, Graff-1 could spark significant international investment to a region which has had minimal E&P activity over the last 25 years," they added.
However, the analysts stressed that a discovery has to be sizeable to be commercially viable. Shell is likely targeting at least 210 million barrels of recoverable resources, they said.
According to Reuters' sources, it is not clear yet if Shell's discovery is as big as to lead to a deepwater development offshore Namibia.
Deepwater plays, with highly productive reservoirs, including offshore Nambia, will be prioritized by large companies this year, Wood Mackenzie said last month. Giant prospects in Brazil, Guyana, Suriname, Namibia, and South Africa would be priorities for majors, while deepwater is likely to account for half of all new volumes, WoodMac said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More