EUR 96.14 For Business Accounts Only

Namibia uncertainty with Shell write-down

Shell is reportedly due to make a write-down in Namibia as discoveries are estimated to be commercially unavailable. Shell has been among the most active oil companies in Namibia, with five discoveries announced, and there have been expectations for future developments. Hence, we see the write-down as a setback for future development activity (which consumes more oil services volumes than exploration). As Total has appeared more optimistic on future developments in Namibia in the past, this setback (seemingly due to weak geology) is likely to increase focus on Total’s comments related to the prospects of its discoveries. From a rig market perspective, we consider a scenario with reduced Namibia activity to be on the downside for the harsh environment semi market (including Norway) long-term, but we see limited to no near-term effect on market balance or dayrates.