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First Hydrocarbon buys oil block worth $147 m

LAGOS (AFP) – A Nigerian firm backed by British company Afren announced on Thursday it has bought a major stake in an onshore oil block from Shell, Total and Agip at a cost of $147.5 million.

The deal long in the works sees First Hydrocarbon Nigeria Limited take a 45 percent stake in the block currently producing some 6,000 barrels per day. The company plans to boost that to 40,000 bpd in four years and eventually 50,000.

“FHN has today announced the completion of its acquisition of a 45 percent interest in OML 26 from SPDC, Total and Agip,” a statement said. SPDC is Shell’s local joint venture, the Shell Petroleum Development Company of Nigeria.

“The announcement follows the agreement signed in October 2010 and the receipt of all necessary government and customary approvals.”

The remaining 55 percent is owned by Nigeria’s state oil firm, the Nigerian National Petroleum Corporation. FHN will partner with the state firm’s exploration and production arm.

Shell, which had been the operator of the block and is historically the largest producer in Nigeria, has been seeking to sell off its share in a number of onshore blocks viewed as marginal.

Analysts say the moves appear to indicate a willingness by Shell to shift more of its focus offshore, where the risks of sabotage and militant attacks are lower.

Pipelines are regularly damaged by oil thieves seeking crude to sell on the black market, while militants claiming to be fighting on behalf of impoverished communities have carried out scores of attacks on facilities.

While militant-related violence has sharply declined since a 2009 amnesty deal, oil theft is believed to be on the rise.

Nigeria, Africa’s largest oil producer, has been pushing for more local involvement in the country’s petroleum industry. The country currently produces more than two million barrels per day.

Afren holds a 45 percent stake in FHN, which it established with the support of Nigerian banks First City Monument and Guaranty Trust.


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