Shell Sells Stake in OML17 for $533m

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Emmanuel Addeh in Abuja

The Shell Petroleum Development Company of Nigeria Limited (SPDC), Friday announced that it had completed the sale of its 30 per cent interest in Oil Mining Lease (OML) 17 and its associated infrastructure in the Eastern Niger Delta.

The oil giant disclosed that the facility was sold to TNOG Oil and Gas Limited, a related company of Heirs Holdings Limited and Transnational Corporation of Nigeria Plc (Transcorp), for a consideration of $533m.

It stated that a total of $453m was paid at completion with the balance to be paid over an agreed period.

According to Wood Mackenzie, OML 17 is a large onshore license within the NNPC/Shell joint venture which includes the northern half of Port Harcourt, extending from the low-lying swamp northwards into drier terrain where the operating conditions are easier.

It was learnt that there were 15 oil and gas fields on OML 17, six of which are producing, where crude oil is exported through the Trans-Niger pipeline to the Shell-operated Bonny Oil Terminal.

There are insinuations that with the sale of OML 17 eventually succeeding, Shell had resolved to shift the focus of its operations in Nigeria to the deep offshore where the risks of attacks on infrastructure and oil theft are lower.

In November last year, host communities of OML 17 kicked against the plan by SPDC, to divest the oil block, threatening to disrupt oil and gas operations in the area.

Some representatives of the host communities said divestment without the input of the host communities was not acceptable, saying that divestment extinguishes existing interest and rights which will create a vacuum.

But in a press release Friday, Shell explained that the completion of the sale followed the receipt of all approvals from the relevant authorities of the federal government of Nigeria.

However, it noted that the SPDC will retain its interest in the Port Harcourt industrial and residential areas, which fall within the lease area.

The statement stressed that SPDC was committed to transfering OML 17 in an orderly and responsible manner to the new owner, which will help to provide a sustainable long-term plan to unlock its full potential.

It stated that the sale also enables SPDC to focus on supporting the federal government of Nigeria’s national energy agenda in its remaining OMLs through oil and gas production, payment of royalties, taxes and levies as well as advancing local content and providing social investments.

Commenting on the deal, Managing Director of SPDC and Country Chairman of Shell Companies in Nigeria, Osagie Okunbor, clarified that the company was committed to a long-term presence in the country.

“As with previous divestments, we will facilitate a successful transition to new ownership. Shell has been in Nigeria for over 60 years and remains committed to a long-term presence here,” he said.

The company added that other SPDC JV partners, Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited, had also assigned their interests of 10 per cent and 5 per cent respectively in the lease, ultimately giving TNOG Oil and Gas Limited a 45 per cent interest in OML 17.

Recall that SPDC is the operator of a joint venture between the Nigerian National Petroleum Corporation (55 per cent), SPDC (30 per cent), Total E&P Nigeria Limited (10 per cent) and Nigerian Agip Oil Company Limited (5 per cent).