Shell has announced an intensified appraisal drilling programme on the Petroleum Exploration Licence (PEL) 39, in Namibia’s Orange Basin. The decision follows the results of the Merlin-1X well, whose permeability and porosity rank, according to the group’s chief executive officer Wael Sawan, among the best observed on this acreage. The executive spoke while presenting the group’s second-quarter 2026 results on July 30. The announcement comes a year after an impairment of the company’s Namibian assets, when Shell had judged that the resources discovered could not be confirmed as commercially developable.
A licence marked by technical setbacks
Since the first well was drilled on the PEL 39 licence at the end of 2021, Shell and its partners — Qatari company QatarEnergy and Namibia’s state-owned hydrocarbons company — have carried out successive drilling campaigns in the Orange Basin, off Namibia’s southern coast. The earliest wells revealed the presence of light oil, a novelty for the country, drawing strong international interest. This renewed attention to offshore exploration comes as the oil sector goes through a mixed earnings season, marked by higher profits at ExxonMobil and Chevron report quarterly earnings boosted by oil prices and by price volatility, illustrated by an episode in which oil fell 5% as Washington held off on striking Iran. Wells drilled in subsequent years, however, revealed reservoir quality issues, including insufficient rock permeability and associated gas content deemed too high to allow commercial development under the conditions identified.
These obstacles led Shell to an impairment decision announced in early 2025, with the company stating at the time that the resources discovered could not, at that stage, be confirmed as commercially developable. The announcement was seen as a setback for Namibia’s oil ambitions. Namibia’s Ministry of Mines and Energy, then led by Tom Alweendo, had nonetheless downplayed the significance of the impairment, arguing that the country’s offshore subsurface potential remained largely unexplored. Since then, Namibia has seen several changes at the head of this ministerial portfolio, now held by Modestus Amutse, appointed Minister of Industrialisation, Mines and Energy in early December 2025.
The Merlin-1X well changes the picture
The turnaround that occurred in spring 2026 has shifted Shell’s trajectory in Namibia. The Merlin-1X well, drilled offshore in partnership with the same Qatari and Namibian partners, delivered reservoir and fluid characteristics notably better than those observed in previous wells drilled on the same licence. Eugene Okpere, Shell’s executive vice-president for exploration, strategy and portfolio, referenced the discovery in a written statement accompanying the results announcement. The outcome led the company to announce an intensified appraisal drilling programme on the PEL 39 licence, aimed at clarifying the size of the resource and assessing its commercial viability.
The Orange Basin remains a major area of interest for the international oil industry, beyond the acreage operated by Shell. TotalEnergies is advancing a separate project there, considered the most mature in the region, toward a final investment decision, with production targeted by the end of the decade. The project, led by the French group’s chief executive officer Patrick Pouyanné, illustrates the competition and complementarity among several major oil companies in the area, whose interests sometimes overlap within neighbouring licences.
A basin still contested
Namibia’s trajectory also fits within a broader reshuffling of the Organization of the Petroleum Exporting Countries (OPEC), which has seen several members withdraw in recent years. QatarEnergy, led by Saad Sherida Al-Kaabi — who also serves as Qatar’s Minister of State for Energy Affairs — remains a partner in the main exploration licences of the Orange Basin. Whether the commercial potential of the PEL 39 licence is confirmed will now depend on the results of the next appraisal wells planned by Shell.