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Thursday, 28 August 2014 08:32

Shell sells off assets over rising Niger Delta insecurity, eyes $5b income

Written by THE NEIGHBOURHOOD ONLINE
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Shell sales off assets over rising Niger Delta insecurity, eyes $5b incomeOil giant, Royal Dutch Shell Plc, is quickly selling off its assets in the Niger Delta region of Nigeria, ostensibly over rising insecurity. So, it is pushing ahead with its planned sale of its assets to meet its $15 billion target from such transactions between 2014 and 2015.
The firm said on Wednesday it had sold four oil fields in Nigeria in its ongoing global asset sales to cut costs.
The oil giant last year put up for sale its 30 per cent shares in four oil blocks in the Niger Delta – Oil Mining Licence (OML) 18, 24, 25, 29 – as well as a key pipeline, the Nembe Creek Trunk Line.
“We have signed sales and purchase agreements for some of the Oil Mining Leases, but not all that we are seeking to divest,” a Shell spokesman told Reuters.
No details were available on the value of the deals signed, nor when the full process will be completed.
France’s Total and Italy’s Eni are also set to raise revenue from the sale of their 10 per cent and five per cent shares in the assets. The Nigerian National Petroleum Corporation (NNPC) owns the remaining 55 per cent.
The Financial Times on Wednesday reported that Shell is close to selling the assets for about $5 billion to domestic buyers.
In March, Reuters reported that Nigerian firms - Taleveras and Aiteo - made the highest bid of $2.85 billion for the biggest of the four oil fields, OML 29.
Shell, along with many other oil majors, is undergoing a broad process of asset sales across the world in an effort to cut costs and boost profits.
Other companies, including Total, Eni, Chevron and ConocoPhillips have sought to pull out of Nigeria which has been plagued by oil theft.
The battle for acquisition of these four oil blocks has been raging since the beginning of the year. Some major stakeholders in Nigeria’s oil and gas industry were opposed to some preferred bidders. This is one of the major reasons the deal has not been sealed. The reason for their opposition stems from the alleged inexperience of some of the companies that won the bids.
Currently, Midwestern Oil and Gas/Mart Resources/Suntrust Oil, under the Erotron Consortium, won the bid for OML 18 while Aiteo/Taleveras in partnership with four other companies made up the consortium that won bid for OML 29 and the Nembe Creek Trunkline. OML 29 is considered the juiciest of the blocks.
The preferred bidder for OML 24 is Pan Ocean Oil Corporation Nigeria Limited while Lekoil, Crestar, Green Acres/CCC/Signet Petroleum, NDPR/SAPETRO and Essar, as a consortium is being considered for OML 25.
The Minister of Petroleum Resources, Mrs. Diezani Allison-Madueke, had said that the value of divested assets by the International Oil Companies (IOCs) including Shell, Chevron and Total from onshore, shallow water and offshore terrains, will hit about $11.5 billion by the end of this year.
She said that before this year ends, at least 20 oil blocks with reserves of not less than four billion barrels of oil equivalent (boe) would have been divested by the multinational oil firms.
She said: “The divestment in the upstream sector of the oil industry by the IOC’s such as SPDC/Total/Agip, Chevron and ConocoPhillips have continued to create an opportunity for participation in the industry by the Nigerian private sector.
“The IOCs operating in Nigeria today have divested assets worth about 2.2 billion boe of hydrocarbon reserves (working interest) at an estimated corresponding monetary value of at least $5 billion. The divestment campaign was highly competitive and attracted interest from a number of indigenous and foreign companies.
“By end of this year, the total number of blocks that are likely to be divested is estimated to exceed 20 with not less than 4 billion boe and a monetary value of about $11.5 billion.”
Shell also plans to sell OMLs 13, 16, 71 and 72, which are in onshore and shallow water provinces. All the assets are joint venture assets owned by Shell, Eni (Agip) and Total with total interests of 45 per cent when the remaining 55 per cent is owned by the Nigerian National Petroleum Corporation (NNPC).
The Chief Executive of Shell, Ben van Beurden, in the company’s strategic report said: “In 2014, we will make hard decisions about our next phase of projects. Capital discipline and potential returns will be critical factors in deciding which to take forward to development,” adding that Shell is cutting its capital expenditure from $46 billion last year to around $37 billion this year as it seeks to “moderate its growth ambition in order to free up cash flow.”
“Shell is shrinking this portfolio and cost base, with 2014 spending to be reduced by 20 per cent compared to 2013, and redirecting onshore investment to the lowest cost gas acreage with the best integration potential, and into ongoing exploration in liquids-rich shales. At the same time, profitable growth should continue in deep-water and heavy oil, where an industry-leading development programme is under way.”
“From 2014, tight gas and liquids-rich shale will have a different role in our strategy. We now see them as an opportunity for the longer term rather than the immediate future.” he added.
Oil giant, Royal Dutch Shell Plc, is quickly selling off its assets in the Niger Delta region of Nigeria, ostensibly over rising insecurity. So, it is pushing ahead with its planned sale of its assets to meet its $15 billion target from such transactions between 2014 and 2015.

The firm said on Wednesday it had sold four oil fields in Nigeria in its ongoing global asset sales to cut costs.

The oil giant last year put up for sale its 30 per cent shares in four oil blocks in the Niger Delta – Oil Mining Licence (OML) 18, 24, 25, 29 – as well as a key pipeline, the Nembe Creek Trunk Line.

“We have signed sales and purchase agreements for some of the Oil Mining Leases, but not all that we are seeking to divest,” a Shell spokesman told Reuters.

No details were available on the value of the deals signed, nor when the full process will be completed.

France’s Total and Italy’s Eni are also set to raise revenue from the sale of their 10 per cent and five per cent shares in the assets.

 

The Nigerian National Petroleum Corporation (NNPC) owns the remaining 55 per cent.

The Financial Times on Wednesday reported that Shell is close to selling the assets for about $5 billion to domestic buyers.

In March, Reuters reported that Nigerian firms - Taleveras and Aiteo - made the highest bid of $2.85 billion for the biggest of the four oil fields, OML 29.

Shell, along with many other oil majors, is undergoing a broad process of asset sales across the world in an effort to cut costs and boost profits.

Other companies, including Total, Eni, Chevron and ConocoPhillips have sought to pull out of Nigeria which has been plagued by oil theft.

The battle for acquisition of these four oil blocks has been raging since the beginning of the year. Some major stakeholders in Nigeria’s oil and gas industry were opposed to some preferred bidders. This is one of the major reasons the deal has not been sealed. The reason for their opposition stems from the alleged inexperience of some of the companies that won the bids.

Currently, Midwestern Oil and Gas/Mart Resources/Suntrust Oil, under the Erotron Consortium, won the bid for OML 18 while Aiteo/Taleveras in partnership with four other companies made up the consortium that won bid for OML 29 and the Nembe Creek Trunkline. OML 29 is considered the juiciest of the blocks.

The preferred bidder for OML 24 is Pan Ocean Oil Corporation Nigeria Limited while Lekoil, Crestar, Green Acres/CCC/Signet Petroleum, NDPR/SAPETRO and Essar, as a consortium is being considered for OML 25.

The Minister of Petroleum Resources, Mrs. Diezani Allison-Madueke, had said that the value of divested assets by the International Oil Companies (IOCs) including Shell, Chevron and Total from onshore, shallow water and offshore terrains, will hit about $11.5 billion by the end of this year.
She said that before this year ends, at least 20 oil blocks with reserves of not less than four billion barrels of oil equivalent (boe) would have been divested by the multinational oil firms.
She said: “The divestment in the upstream sector of the oil industry by the IOC’s such as SPDC/Total/Agip, Chevron and ConocoPhillips have continued to create an opportunity for participation in the industry by the Nigerian private sector.

“The IOCs operating in Nigeria today have divested assets worth about 2.2 billion boe of hydrocarbon reserves (working interest) at an estimated corresponding monetary value of at least $5 billion. The divestment campaign was highly competitive and attracted interest from a number of indigenous and foreign companies.

“By end of this year, the total number of blocks that are likely to be divested is estimated to exceed 20 with not less than 4 billion boe and a monetary value of about $11.5 billion.”

Shell also plans to sell OMLs 13, 16, 71 and 72, which are in onshore and shallow water provinces. All the assets are joint venture assets owned by Shell, Eni (Agip) and Total with total interests of 45 per cent when the remaining 55 per cent is owned by the Nigerian National Petroleum Corporation (NNPC).

The Chief Executive of Shell, Ben van Beurden, in the company’s strategic report said: “In 2014, we will make hard decisions about our next phase of projects. Capital discipline and potential returns will be critical factors in deciding which to take forward to development,” adding that Shell is cutting its capital expenditure from $46 billion last year to around $37 billion this year as it seeks to “moderate its growth ambition in order to free up cash flow.”

“Shell is shrinking this portfolio and cost base, with 2014 spending to be reduced by 20 per cent compared to 2013, and redirecting onshore investment to the lowest cost gas acreage with the best integration potential, and into ongoing exploration in liquids-rich shales. At the same time, profitable growth should continue in deep-water and heavy oil, where an industry-leading development programme is under way.”

“From 2014, tight gas and liquids-rich shale will have a different role in our strategy. We now see them as an opportunity for the longer term rather than the immediate future.” he added.

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