Vanguard (Lagos)

1 August 2013

Nigeria: Shell to Sell Off Four More Oil Blocs

Photo: Shell/Facebook
Shell oil truck

Shell plans to sell at least four more oil blocs in Nigeria due to increasing crude theft, oil spills, community challenges and its inability to renew the licenses of some of the fields.

According to reports, the blocs, which are in joint ventures with Nigerian National Petroleum Corporation, NNPC, are Oil Mining Licences, OMLs, 13 and 16 onshore the Niger Delta, and OML 71 and 72, which are in shallow waters.

The report said OML 13 and 16 lie in Ogoniland region, where Shell had experienced long-running disputes with local communities, multiple oil spills and widespread pipeline sabotage and theft.

OML 13 covers a large geographical area and has big gas reserves, while OML 16 is a much smaller asset.

The report further stated that OML 72 had proven oil reserves of around 120 million barrels, while OML 71 has significantly lower reserves.

Sources said Shell had been discussing renewing these licences with Federal Government over the years, but was yet to reach a deal.

Reports said NNPC owns 55 percent, Shell 30 percent, Total 10 percent and Eni owns five percent, adding that in all previous deals, Total and Eni had also sold their shares.

Spokespersons for Shell and Eni declined to comment and Total said it had no immediate comment on what plans were for their stakes in the blocs.

Rolake Akinkugbe, London-based head of oil and gas at Ecobank Research, said: "The move offshore is being viewed as a longer-term solution to the challenges faced onshore and in the shallow waters.

"Due to the increased level of oil theft and disruptions, a number of oil companies have started selling blocs in the troubled areas and moving to deep water offshore blocs."

However, Gbenga Sholotan, an energy analyst at Stanbic IBTC Bank, Lagos noted that apart from the security concerns, energy companies in Nigeria are refocusing on deep-water production because of declining onshore reserves; as such reserves replacement strategy is coming into play.

Meanwhile, James Craig, a Houston-based spokesman, had said in July that Chevron was reviewing its business plan in Nigeria and adopting new approaches to investment due to the current situation.

He said: "The emerging situation brings with it some important challenges to our traditional way of doing business and also provides us some attractive business opportunities.

"Our commitment to Nigeria remains strong. We have been in Nigeria for over 50 years."

When contacted regarding Shell's policy on onshore and offshore oil fields, Precious Okolobo, a spokesman for Shell in Nigeria, declined comment.

But SPDC had, in June, said that it was undertaking a strategic review of its Nigerian business and may exit from the interests it holds in some further onshore leases.

Chevron, Exxon Mobil Corporation, Total, Eni run joint ventures with the NNPC that pump most of Nigeria's oil, but Shell has sold eight oil leases in three years.

When contacted, the spokesperson of NNPC, Omar Farouk Ibrahim said: "The move to deep offshore by these companies frees up the onshore fields for the local companies to increase their production.

"It gives room for those who don't have the capacity for deep offshore to participate in the industry by operating the onshore and shallow water fields."

With Agency Report

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