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Shell to sell off four more Nigeria oil blocks

BY MICHAEL EBOH & JONAH NWOKPOKU with Agency Report

Shell plans to sell at least four more oil blocks 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 report, the blocks which are in joint ventures with the Nigerian National Petroleum Corporation, NNPC, are Oil Mining Licenses (OMLs) 13 and 16 onshore the Niger Delta, and OML 71 and 72, which are in shallow water.

The report said, OML 13 and 16 lie in the Ogoniland region where Shell has 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 has proven oil reserves of around 120 million barrels, while OML 71 has significantly lower reserves.

Sources said Shell has been discussing renewing these licenses with the Federal Government over the years but has yet to reach a deal.

Reports said NNPC owns 55 per cent, Shell 30 per cent, Total 10 per cent and Eni owns five per cent, adding that in all previous deals, Total and Eni have 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 blocks.

Shell and another multinational —Chevron Corporation — are selling off their onshore blocks to mitigate the risks of the increasing menace of kidnapping, sabotage and crude theft in the country.

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 blocks in the troubled areas and moving to deep water offshore blocks.”

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

“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,” he said.

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 is 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 Nigerian National Petroleum Corporation 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.”

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 reserve replacement strategy is coming into play.

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.

Sam Ramon, spokesperson for Chevron, also said last month that it wants to sell five fields in shallow waters in the western delta and swamps in the east.

International news agency — Bloomberg — reported that as the large oil companies leave, their onshore fields are being bought by mostly smaller, Nigerian companies.

Exxon Mobil, whose operations were limited to the shallow and deep offshore waters of the southeastern coast, has recorded a number of output disruptions, about three attacks in the last decade, compared with 945 recorded by Shell between 2007 and 2012.


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