Shell to Sell Four More Oil Blocks

01 Aug 2013

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By Chika Amanze-Nwachuku, with agency reports

Oil giant, Shell, will sell four more oil blocks in Nigeria in its latest divestment from the country, Reuters has reported.

The blocks for sale are Oil Mining Licenses (OMLs), 13 and 16, located onshore the Niger Delta, and OMLs 71 and 72 are in shallow waters.

OML 72 has proven oil reserves of around 120 million barrels, while OML 71 has significantly lower reserves, the newswire quoted a source to have said.

The two onshore blocks lie in the Ogoniland region where Shell has experienced long-running disputes with local communities, multiple oil spills and widespread pipeline sabotage and theft.

The source also confirmed that the OML 13 covers a large geographical area and has big gas reserves, while OML 16 is a much smaller asset.

Shell has been discussing renewing these licences with the federal government for years but has yet to reach a deal, the report added.

The oil blocks are in joint ventures  with the Nigerian National Petroleum Corporation (NNPC), which controls 55 per cent while Shell and its multinational partners,Total and Eni, control 30 per cent, 10 per cent five per cent respectively. In all previous deals, Total and Eni have also sold their shares.

Eni was said to have declined to comment, while Total, according to the news agency, had no immediate comment on what their plans were for their stakes in the blocks.

Shell said in June that it was considering further sale of assets in the Niger Delta, where it has security problems - although it has never publicly connected the two.

The oil major said then that it was still committed to Nigeria long term. It has already sold eight oil block licences for a total $1.8 billion since 2010.

Sources familiar with transaction were quoted by Reuters to have said that Shell was already in talks with NNPC about the sales initially before approaching potential buyers, two sources said.

In previous deals, rows over who would take over from Shell as operator of the blocks slowed down sales because some buyers initially thought they would run the blocks before NNPC's operating arm, NPDC, took up its right to be the operator.

Potential buyers will want clarity on who will operate the blocks, what steps will be taken to tackle security issues and who will manage Shell's infrastructure before a value can be put on each of the assets, Reuters quoted the sources as saying.

Previous buyers of Shell blocks include London-listed firms Afren and Heritage Oil, while Nigeria's Oando already owns a marginal field in OML 13.

Chevron Nigeria Limited, the Nigerian subsidiary of  the United State-based  Chevron Corporation also plans to sell five shallow water blocks, while fellow U.S. firm ConocoPhillips is selling its Nigerian businesses to Oando Energy for about $1.79 billion.

Chevron had said in June that it was divesting interests in three more Nigerian oil blocks.

The acreages are OMLs 52, 53 and 55 located in the Niger Delta from where the company wants to dispose 40 per cent stake, just as it did last week on OMLs 83 and 85 operated as a joint venture with the NNPC.

Tags: News, Nigeria, Featured, Shell, Four Oil Blocks

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