Nigeria - Shell Oil Realize $102 Million From Fresh Oil Block Sale

Shell Petroleum Development Company (SPDC) has confirmed the completion the sale of its share in Oil Mining Lease (OML 40) to a consortium for $102 million (about N15.3 billion).

The block located onshore Niger Delta is sold to a consortium comprising a Scotland-based firm, Eland Oil and Gas, and an indigenous firm and Starcrest Limited. The consortium is called Elcrest Exploration and Production Nigeria Limited and is majority Nigerian-owned.

Elcrest is also buying a 10 per cent stake in the field from Total and a 5 per cent from the Nigeria Agip Oil Company.

Under the new arrangement, the consortium will now have a 45 per cent share in the block, while the Nigerian National Petroleum Corporation (NNPC) holds the remaining 55 per cent.

Shell’s spokesperson, Precious Okolobo, confirmed the deal to reporters in a telephone chart yesterday, emphasising on the Nigerian content consideration.

Shell had in a statement said that “30 per cent interest in OML 40 in the Niger Delta to Elcrest Exploration and Production Nigeria Limited. Total cash proceeds for SPDC amount to some $102 million.”

It confirmed that all approvals have been received from the relevant authorities of the Federal Government and the NNPC.

SPDC, which is the operator of the block, said the sale brought to six the number of onshore lease assignments it had divested in Nigeria since 2010.

It said: “This divestment is part of Shell’s strategy of refocusing its onshore interests in Nigeria and in line with the Federal Government of Nigeria’s aim of developing Nigerian companies in the country’s upstream oil and gas business,” it said.

Experts believed that the moves may have been aimed at increasingly shifting Shell’s focus in Nigeria offshore, where the risks of sabotage and militant attacks are lower.

However, the company argued that the move was in line with the Federal Government’s local content agenda, aimed at increasing local involvement in the oil industry.

The Managing Director, SPDC Mutiu Sunmonu, said: “These divestments mark another step in the strategy to re-focus the SPDC portfolio. SPDC is positioned well for investment and growth opportunities in all areas, including domestic gas, which will be delivered with the support of our government, partners and the people of Nigeria”

OML 40 covers an area of some 498 square kilometres and includes the Opuama, Abiala and Adagbassa Creek fields and related facilities.

Shell said operations in the oil block had been stopped in 2006 because of militant unrests.

Eland plans to recommission the existing infrastructure at OML 40 and restart oil production at an initial gross rate of 2,500 barrels of oil per day (bpd), with a target to reach 50,000 bpd within four years.

Shell said it remained committed to onshore and offshore oil production in Nigeria. Although its operations in the Niger Delta have in the past been hampered by a campaign of sabotage by militants, Shell said conditions had improved since the government launched an amnesty in 2009.

However, the oil major added that the most significant problem in the region was now oil theft, or ‘bunkering’, which the United Nations has estimated to have cost Nigeria 150,000 barrels per day in lost oil sales.

Shell has said there have been estimates that 150,000 barrels of oil and condensate are stolen in the country each day. Nigeria currently exports more than two million barrels per day.