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Shell plc (NYSE:SHEL) is reportedly requesting government authorization to drill up to five offshore wells along South Africa’s west coast.
The oil major plans to drill exploration and appraisal wells in the area, shifting focus south of Namibia where recent discoveries in the prolific Orange Basin suggest further potential, reported Reuters.
Notably, Shell Offshore Upstream South Africa B.V. and its joint venture partners require government environmental authorization to operate in the Northern Cape Ultra Deep Block (NCUD) within the Orange Basin.
As per the draft scoping report, water depths are anticipated to be between 2,500 meters and 3,200 meters in the region.
The report cited Jamie McGreevy, lead analyst for Namibia and South Africa at Welligence Energy Analytics, who commented, “If you consider the scale of the opportunity as well as the size of giant discoveries in Namibia, it is really the big prize that they going after and that can be transformational for South Africa.”
As per the report, South Africa’s plans to develop its early-stage oil and gas potential have been stalled by growing environmental pressures, legal challenges to drilling, and bureaucratic hurdles, while neighboring Namibia attracts increased industry interest.
This week, Shell stated that it expects to incur non-cash post-tax impairments of $1.5 – $2 billion in the second quarter of FY24, including Singapore Chemicals & Products and Rotterdam HEFA assets.
Shell stock has gained around 22% in the last 12 months. Investors can gain exposure to the stock via Direxion Hydrogen ETF (NYSE:HJEN) and VanEck Natural Resources ETF (NYSE:HAP).
Price Action: SHEL shares are down 0.12% at $72.63 premarket at the last check Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Shutterstock
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