Jan. 31 (Bloomberg) -- Royal Dutch Shell Plc, Europe’s largest oil company, will write off about $200 million because of an unsuccessful well off the coast of Tanzania, according to Sanford C. Bernstein & Co.
Shell bought 50 percent of Blocks 5 and 6 in Tanzania from Petroleo Brasileiro SA last year. The partners started the Zeta- 1 well in Block 5 in August. The well has now been plugged and abandoned, according to the website of the Tanzania Petroleum Development Corp.
“It was dry so they abandoned it,” said Halfani R. Halfani, director of exploration at the TPDC. “ We got valuable geological information which could be used for future exploration programs.”
Shell’s earnings from exploration and production for the fourth quarter will be “affected by a $200 million exploration write-off following a dry well offshore Tanzania,” Oswald Clint, a London-based analyst at Bernstein, wrote in a Jan. 30 report. Lucas Herrmann, a London-based analyst at Deutsche Bank AG, said the expected charge will be “larger than usual.”
Jonathan French, a spokesman for Shell, which releases earnings on Feb. 2, declined to comment.
Tanzania may have as much as 10 trillion cubic feet of gas reserves, Energy Minister William Ngeleja said in September. BG Group Plc and Ophir Energy Plc are also exploring off the East African nation’s coast for oil and natural gas.
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