15 Oct 2015 – Shell [LON:RDSA] is looking to divest all its onshore activities in Nigeria, an official from that country’s Department of Petroleum Resources told this news service.
The Anglo-Dutch oil major communicated these intentions to the official earlier this month, he said. A formal announcement is yet to be made, but it is expected to include timelines for the disposal, he added.
Permission for these divestment plans will need to be granted by Nigeria’s Minister of Petroleum Resources. That position has been vacant since Diezani Alison-Madueke stepped down in May. A new minister will be appointed by the end of the year, the official said.
Shell Petroleum Development Company of Nigeria (SPDC) is the operator and 30% shareholder of 22 onshore and shallow water blocks. The joint venture partners in these blocks are state-owned Nigerian National Petroleum Company (55%); Total E&P Nigeria (10%), part of Paris-listed Total [EPA:FP]; and Nigerian Agip Oil Company, a local subsidiary of state-backed Italian energy company Eni, with 5%.
From Shell’s perspective, shedding more onshore operations is a logical next step as it reduces exposure to peripheral activities, a sector banker said. “These marginal fields aren’t profitable in the current market and there’s also the issue of oil theft,” he said. Earlier this year, SPDC divested four onshore blocks – OML 18, OML 24, OML 25 and OML 29 – for about USD 5bn. Nigerian oil companies bought stakes in all four blocks. According to earlier news reports, Shell decided to exit the blocks on account of widespread local siphoning of oil.
“Shell remains committed to Nigeria,” a company spokesperson said in a statement. At the same time, “Our strategy in Nigeria is to reduce our onshore oil footprint while making investments in other growth areas, particularly deep water and the gas value chain,” the spokesperson added.
Another local subsidiary, Shell Nigeria Exploration and Production Company (SNEPCo) holds interests in four deep water blocks. Of these, SNEPCo operates two, Bonga and Bolia. SNEPCo has a 50% non-operating stake in the Zabazaba/Etan project operated by Agip and a 44% interest in Erha, operated by Exxon [NYSE:XOM].
By Katie McQue