Anglo-Dutch oil multinational, Shell, is in the process of concluding the sale of some of its four Nigerian oil blocks in a $5 billion deal, as part of the company’s plan to dispose of $15 billion of its global assets in 2014 and 2015 to cut costs and boost profits.
The oil major had in 2013 offered for sale it’s 30 per cent equity in four oil blocks – Oil Mining Leases (OMLs) 18, 24, 25, 29 – as well as the $1.1 billion Nembe Creek Trunk Line, a key pipeline in the eastern Niger Delta.
Total and ENI are also set to sell 10 per cent and five per cent respectively in the four Nigerian leases.
The Nigerian National Petroleum Corporation (NNPC) shall retain ownership of the remaining 55 per cent in each of the four leases, and possibly operatorship of the oil fields.
Shell had earlier given till the end of June to local and international investors that had formed consortiums and submitted bids for the four oil blocks to show their commitment to pay for the assets both in the form of equity and debt.
Prior to the June deadline, the bidders had already paid 10 per cent of their bids to Shell and would forfeit their deposits if they fail to pay the balance for the assets within the timeframe determined by the oil major.
Reuters quoted a Shell spokesman as saying that some of the deals had been concluded but gave no details on the value of the deals signed, nor when the whole transactions would be concluded.
“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 was quoted as saying.
The Financial Times also reported that Shell was close to selling the assets for about $5 billion to domestic buyers and their international partners.
When contacted, a member of one of the consortiums that won one of the oil blocks informed newsmen that the buyers were in the process of wrapping up the transactions with Shell, “but the sale could only be deemed conclusive after the minister’s consent had been given”.
He said: “Most of us have demonstrated our capacity to pay in debt and equity. We are just tying up some loose ends which should be concluded in a few days to close the deals.”
Under the ongoing divestment programme, Midwestern Oil & Gas Plc/Mart Resources/Suntrust Oil, under the Erotron Consortium, won the bid for OML 18, having offered $1.2 billion for the oil block.
OML 29 and the Nembe Creek Trunkline were won by Aiteo/Taleveras in conjunction with four other companies in the consortium, having submitted a $2.5 billion bid for the assets.
The 60-mile Nembe Creek Trunk Line, one of Shell’s two key pipelines in the eastern Niger Delta, which the oil giant replaced in 2010 at a cost of $1.1 billion, has been regularly attacked by oil thieves, forcing the company to sell it under its divestment programme.
OML 29 is the most prolific oil lease under the current asset sale.
Pan Ocean Oil Corporation Nigeria Limited, operator of the NNPC/Pan Ocean Joint Venture, clinched OML 24 after submitting a bid of $900 million for the asset valued at between $500 million and $1 billion.
OML 24 currently delivers 25,000 barrels of oil equivalent per day from three fields and eight million standard cubic feet per day of gas (MMscf/d).
Lekoil, Crestar, GreenAcres/CCC/Signet Petroleum, NDPR/SAPETRO and Essar submitted bids for OML 25. With a $500 million bid, Crestar won OML 25.
However, like past asset sales, NNPC is insisting that the operatorship of the four oil blocks will not be transferred to the new buyers but to the Nigerian Petroleum Development Company (NPDC), the E&P subsidiary of NNPC.
NNPC is contending that this will be in accordance with the governing Joint Operating Agreement (JOA) between it and the international oil companies (IOCs).
Of all the assets so far sold by Shell, only OMLs 4, 38 and 41 are operated by the buyer, Seplat Petroleum
But in accordance with the JOA, the operatorship of other producing assets – OMLs 26, 30, 34, 40 and 42 – sold by Shell, were transferred to NPDC, rather than the new buyers.