The Shell Petroleum Development Company of Nigeria Limited (SPDC) and other joint venture firms, Total Exploration and Production (E&P) Nigeria Limited and Nigerian Agip Oil Company Limited have realised $2.437 billion from sale of their interests in two oil blocks – oil mining lease (OML) 18 and OML 29 and the Nembe Creek Trunk Line (NCTL) and related facilities in the Eastern Niger Delta.
The companies completed sale of their interests in assets last week bringing an end to the controversies that trailed the transaction since last year. The transaction on the two assets ought to have closed since last year alongside other two blocks OMLs 24, 25, but because OMLs 18 and 29 were considered juicy when compared to others and besides there were issues of capacity and capability on the side of the preferred bidders, the transaction lingered till last week.
According to SPDC’s Corporate Media Relations Manager Precious Okolobo, Shell’s interests in OML 18 were assigned to Eroton Exploration & Production Company Limited and total cash proceeds for Shell amount to $737 million while OML 29 and the NCTL were sold to Aiteo Eastern Exploration and Production (E&P) Company Limited and total cash proceeds for Shell amount to some $1.7 billion.
This divestment is part of the strategic review of SPDC’s onshore portfolio and is in line with the Federal Government’s aim of developing Nigerian companies in the country’s upstream oil and gas business, he added.
Shell, he said, has been in Nigeria for more than 50 years and remains committed to keeping a long-term presence there – both onshore and offshore. Through SPDC and its other Nigerian companies, Shell responsibly produces the oil and gas needed to help fuel the economic and industrial growth that generates wealth for the nation and jobs for Nigerians.
OML18 covers an area of 1,035 square kilometres and includes the Alakiri, Cawthorne Channel, Krakama, and Buguma Creek fields and related facilities. The divested infrastructure includes flow stations together with associated gas infrastructure plus oil and gas pipelines within the OML. The divested fields produced on average of about 14,000 barrels of oil equivalent per day in 2014.
OML29 covers an area of 983 square kilometres and includes the Nembe, Santa Barbara and Okoroba fields and related facilities. The NCTL is 100 kilometres long and has a capacity of 600 thousand barrels per day. It was commissioned in 2010 and evacuates crude to the Bonny Crude Oil Terminal (BCOT). BCOT is not part of the transaction and will remain owned and operated by the SPDC Joint Venture. The divested infrastructure includes flowstations together with associated gas infrastructure plus oil and gas pipelines within the OML. The divested fields produced around 43,000 barrels of oil equivalent per day (100 per cent) in 2014.
Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited have also assigned their interests of 10 per cent and 5 per cent respectively in the lease, ultimately giving Eroton Consortium a 45 per cent interest in OML 18 and also assigned the same interests to Aiteo Eastern E&P Company Limited ultimately giving it a 45 per cent interest in OML 29 and the Nembe Creek Trunk Line.
Shell said all approvals have been received from the relevant authorities.
Royal Dutch Shell Plc had said it targets $15 billion from assets sales between last year and this year. The divestments of the assets are part of the steps to achieve the target.
Shell Chief Executive Officer Ben Van Beurden had said the company had already completed about $8 billion in asset sales and announced plans to dispose of about $15 billion through 2015 adding that the company agreed to sell two natural gas assets in the United States for $2.1 billion plus shale acreage.
Minister of Petroleum Resources, Mrs. Diezani Allison-Madueke, said last year that the value of divested assets by the International Oil Companies (IOCs) including Shell, Chevron, Total and Agip from onshore, shallow water and offshore terrains, would hit about $11.5 billion by the end of last year.
She said before the end of last year, at least 20 oil blocks with reserves of not less than four billion barrels of oil equivalent would have been divested by the multinational oil firms.
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