Shell in Angola: The Return to Offshore Exploration

Shell’s Return: A Major Vote of Confidence in Angola

Shell plc’s return to Angola in October 2025, through a 17-block memorandum of understanding (MoU) with ANPG valued at approximately USD 1 billion in committed exploration expenditure, was the single most significant international investment commitment in Angola’s upstream sector in years. The MoU represented both a strategic re-entry by one of the world’s largest oil companies and a powerful endorsement of Angola’s geological potential, fiscal competitiveness, and institutional credibility under ANPG’s stewardship.

Shell had previously operated in Angola through interests in several deepwater blocks, including a stake in Block 18 (subsequently transferred to the entities that became Azule Energy). The company exited its direct Angolan positions in the 2010s as part of a global portfolio rationalisation. The October 2025 return signals a fundamental reassessment of Angola’s attractiveness, driven by three factors: the geological analogies with Shell’s major discoveries in the adjacent Namibia Orange Basin, ANPG’s improved licensing process, and the competitive fiscal terms now available.

The 17-Block MoU

Scope and Structure

The MoU covers 17 blocks across the deepwater and ultra-deepwater Lower Congo and Kwanza basins. The blocks span water depths from approximately 1,000 to 3,500 metres, encompassing both proven and frontier geological plays.

Key parameters:

• Blocks: 17 exploration blocks (specific block numbers to be confirmed upon PSA signature)
• Basins: Lower Congo Basin and Kwanza Basin
• Water depths: 1,000 to 3,500 metres
• Committed expenditure: Approximately USD 1 billion over the initial exploration periods
• Work programme: Multiple 3D seismic acquisition campaigns and a minimum number of exploration wells across the block portfolio
• Timeline: PSA negotiations expected to conclude in 2026, with exploration activities commencing in 2026-2027

Portfolio Approach

Shell’s approach—securing a large portfolio of 17 blocks rather than targeting a single high-conviction prospect—reflects a strategy of geological option value. By holding a diversified portfolio across two basins, Shell maximises the probability of making at least one significant discovery while managing the risk inherent in individual exploration wells that cost USD 100 to USD 200 million each in ultra-deepwater settings.

This portfolio strategy mirrors Shell’s approach in Namibia, where the company holds interests in multiple blocks in the Orange Basin and has made the Graff and Jonker discoveries—two of the most significant exploration finds globally in recent years. The geological continuity between the Namibia Orange Basin and Angola’s southern offshore is a key factor in Shell’s Angolan exploration thesis.

Strategic Rationale

Namibia Geological Analogy

Shell’s Graff discovery in PEL 39 (Namibia) in 2022 and the subsequent Jonker appraisal well confirmed a world-class light oil discovery in the Orange Basin. The geological play—a Cretaceous-age deepwater turbidite system deposited in a passive margin setting—has direct analogues in Angola’s southern offshore, particularly in the Namibe and southern Kwanza basins.

The Angola MoU allows Shell to test these geological analogues on the Angolan side of the boundary, potentially extending the play fairway and identifying additional multi-billion-barrel prospects.

Fiscal Competitiveness

The fiscal terms available in Angola—particularly for deepwater exploration blocks—have become more competitive following the introduction of Decree 8/24 and the evolution of ANPG’s licensing terms. Government take for deepwater exploration under current terms (estimated at 55-65 percent) is competitive with peer jurisdictions and significantly more attractive than legacy Angolan terms.

Infrastructure Advantage

Unlike frontier basins in Namibia, Suriname, or East Africa, Angola offers existing oil export infrastructure—pipelines, FSO vessels, port facilities—that reduces the time and cost of initial monetisation for any discovery. An Angola deepwater discovery within tieback distance of existing FPSO infrastructure could achieve first production 5 to 7 years after discovery, compared to 8 to 12 years for a greenfield development in an uninfrastructured basin.

Exploration Programme

Seismic Acquisition

Shell’s exploration programme in Angola is expected to begin with large-scale 3D seismic acquisition across the 17-block portfolio. Modern broadband seismic technologies—including multi-azimuth and full waveform inversion (FWI) processing—will be deployed to image the subsurface structure and identify drilling targets.

Seismic acquisition is expected to require 12 to 24 months of vessel time, with data processing and interpretation adding an additional 12 to 18 months before drilling targets are confirmed. The total cost of the seismic programme is estimated at USD 200 to USD 400 million.

Exploration Drilling

Based on seismic interpretation results, Shell is expected to drill 3 to 6 exploration wells across the 17-block portfolio during the initial exploration period (approximately 2027-2030). Each well will cost approximately USD 100 to USD 200 million in ultra-deepwater, implying a total drilling expenditure of USD 300 to USD 1.2 billion.

The exploration programme will target a combination of:

• Post-salt turbidite plays (proven in the Lower Congo Basin)
• Pre-salt carbonate and clastic plays (proven in Brazil’s Santos Basin and potentially in Angola)
• Cretaceous plays analogous to the Namibia Orange Basin discoveries

Success Metrics

Shell will measure the success of its Angolan exploration programme against the following criteria:

• Discovery of at least one commercial accumulation exceeding 500 million barrels of recoverable oil
• Confirmation of the geological analogues with the Namibia Orange Basin
• Identification of additional prospects to support a multi-phase development programme

Partnership and Operatorship

Shell is expected to operate the majority of its 17-block portfolio, leveraging its deepwater drilling expertise and global supply chain. However, the company may partner with other operators for selected blocks, particularly in areas where co-venturer geological knowledge or infrastructure access adds value.

Potential partners include:

• TotalEnergies: Kwanza Basin neighbour with the Kaminho development providing infrastructure
• Equinor: Deepwater specialist with existing Angolan interests in the Lower Congo Basin
• Sonangol: State oil company participation is expected in all Shell-operated blocks

ESG and Net-Zero Alignment

Shell has committed to achieving net-zero emissions from its operations by 2050, and the company’s Angolan exploration programme will be conducted in alignment with this target. Specific ESG considerations include:

• Low-carbon development design: Any discovery resulting from the exploration programme will be developed with zero routine flaring, high-efficiency power generation, and methane emissions management from the outset.
• Environmental compliance: Shell will conduct comprehensive environmental impact assessments for all seismic and drilling activities, in compliance with Angolan regulations and the company’s own environmental standards.
• Carbon offset strategy: Shell’s global nature-based solutions portfolio, with a USD 100 million per year investment commitment, could be partially deployed in Angola to support forestry and community-based offset projects.

Workforce and Local Content

Shell’s re-entry into Angola will create significant employment and local content opportunities, contributing to the broader upstream investment pipeline. The exploration phase alone will require:

• Geoscientists and engineers for seismic interpretation and well planning
• Drilling crew and support personnel for exploration wells
• Marine logistics services (supply vessels, anchor handling tugs, standby vessels)
• Onshore support functions (procurement, logistics, HSE, legal, finance)

Shell’s local content plan, submitted as part of the MoU process, is expected to include commitments to Angolan workforce hiring, training programmes, and procurement from Angolan-owned oilfield service companies.

Implications for Angola

Shell’s return has several significant implications:

1. Production potential: If exploration is successful, Shell could add 100,000+ bpd of new production to Angola’s output by the early 2030s, materially contributing to the government’s production stabilisation objectives.
2. Fiscal revenue: Signature bonuses, seismic and drilling expenditure, and eventual production taxes will generate significant fiscal revenue through the petroleum fiscal regime.
3. Signal effect: Shell’s commitment encourages other international companies to evaluate Angola, potentially attracting additional investment in future licensing rounds.
4. Technology transfer: Shell brings world-class deepwater technology and expertise that will benefit Angola’s petroleum sector through knowledge transfer and local content programmes.

Conclusion

Shell’s return to Angola through the 17-block MoU is a transformational event for the country’s upstream sector. The commitment of approximately USD 1 billion in exploration expenditure by one of the world’s most technically capable deepwater operators validates ANPG’s licensing programme, Angola’s geological potential, and the competitiveness of the country’s fiscal terms. If Shell discovers the next major deepwater oil field in Angola—a realistic possibility given the Namibia geological analogy—it would reshape Angola’s production trajectory for decades to come.