NG News: Shell to Dump Nigeria’s Oil Fields
By Festus Akanbi with Agency Reports, 12.20.2009
- x ThisDay -
Amidst the speculation of harsher terms on foreign operators in the Nigerian oil industry next year, Royal Dutch Shell, the oil giant, has offered some of its oilfields in the Niger Delta valued at up to $5 billion (£3.1 billion) for sale.
The proposed sale by Shell will coincide with the decision of industry operators to weigh the plan by the Federal Government to hand over control of the industry to domestic firms.
Shell is the biggest oil firm in Nigeria, the world’s tenth largest producer, and has had operations in the country for 70 years.
Time Online reported yesterday that the company recently launched a formal sales process that is being overseen by Ann Pickard, head of Shell Nigeria.
“They have been talking about this for a while but it has now kicked off,” said a source close to the situation. “They are inviting proposals and circulating technical data on their fields.”
The growing violence and soured relations with the government in recent years had made Shell to invest billions elsewhere to offset its dependence on the country.
With new projects in the Gulf of Mexico and Qatar near completion, it is understood that Peter Voser, Shell’s chief executive, is now keen to reduce its (Shell’s)?operations in Nigeria.
Sinopec, one of China’s state-owned oil groups, has requested for information on the oil fields being offered for sale. It is thought that indigenous companies such as Oando, Nigeria’s largest independent group, and London-listed Afren, could also pick up some fields.
Shell declined to comment but sources involved in talks with the company said the assets in question could be worth up to $5 billion. It is not selling its offshore blocks, which are less vulnerable and have more generous royalty terms.
THISDAY gathered that the sale may not be unconnected with tough operating conditions, which have pitched Shell against several oil producing communities. Shell immediately considered a strategy where the buyers of the oil fields will produce the wells, while Shell will retain the underlining titles and assets.
Under this arrangement, she will not lose its reserves but will continue to benefit from the proceeds from the fields.
Most of Shell’s fields are onshore and it is understood that the divestment programme is focused primarily on those in the western part of the country. These include producing fields as well as undeveloped blocks and those now shut down because of the violence.
Further impetus has been provided by the end of long-term oilfield leases that were granted to Shell and other western rivals such as Exxon Mobil and Chevron. The leases, which have been in force for at least 20 years, were struck under the framework set out in the Petroleum Act of 1960. The Nigerian government is driving a hard bargain on renewal talks.
Adewale Tinubu, chief executive officer, Oando PLC, said: “This has been a long time coming. The Petroleum Act was passed in 1960. It’s now almost 2010. It’s the biggest shake-up of the industry since Nigeria became independent.”
He added: “Shell will be the predominant seller. They have the widest footprint across the country and need to optimise the most.”
CNOOC, another Chinese state firm, recently offered $50 billion for a huge swathe of the country’s reserves. Some of these are still controlled by joint ventures between Nigeria’s national oil company and western partners.
AI
