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Royal Dutch Shell is about to complete the sale of its stake in
four onshore oil blocks in Nigeria after it received bids from a number of
foreign and local interests.

A Reuters report yesterday said “some of these assets hold over
300 million barrels of proven oil reserves and bids for the largest block have
exceeded $1 billion, industry sources said. Shell confirmed on Wednesday four
blocks were still on offer but had no further comment.”

Industry watchers hope indigenous companies would bid for the
blocks and that local players, who are likely to be partnered by foreign oil
companies or independent investors, will have the best chance of securing the
blocks.

Precious Okolobo, one of the spokespersons of the oil company,
stated that the company would enlighten the public in due time.

“Shell has commenced the sale of equities in various offshore
fields in the Niger Delta, selling 30 per cent stake in four onshore blocs with
an estimated two billion barrels of reserves. Bidders include both local and
foreign. Interested local buyers include Conoil producing, Oando, Dangote
Group, and Niger Delta Petroleum,” Bismarck Rewane, managing director,
Financial Derivates, said.

According to him, local bidders are favourites due to
developments in the Niger Delta and the local content bill.

“Shell has refocused strategy at investing in offshore
operations spurred by the lucrative nature of offshore Production Sharing
Contracts (PSC’s), and attacks on Shell facilities,” Mr. Rewane said.

Shell has already sold part of offshore assets in January 2010.
Shell and JV partners, Total and Agip, sold equity stakes in OMLs 4, 38, and
41. Although not publicly announced, in this round Shell is looking to divest
its 30 per cent interest in the following Nigerian blocks: OML30, OML34, OML40,
and OML42.

Oil services firm, Petrofac, said this week its Nigerian
partner, Seven Energy, was bidding for one of the blocks, while local players –
Oando, Vertex Energy, Niger Delta Ltd., and Conoil – are all involved in
current bids, sources said.

Some of the companies that are reported to have indicated their
interest in the bid include Conoil, African Petroleum (now Forte Oil), Afren,
Neconde Energy, Essar Oil, Seven Energy, Oando, and Niger Delta Petroleum.

Shell’s sale of assets in Nigeria is part of a wider plan to
divest $5 billion of assets in Africa in 2011. It is believed that the actual
potential will be a lot clearer once the winners are announced and more
detailed technical data are publicly available.

Moving the oil bill
forward

Experts say delay of the PIB could also be cited as a reason for
Shell’s withdrawal from onshore operations.

The Senate this week pushed back a debate on long-delayed
reforms to the oil industry, making it unlikely the ambitious legislation will
pass as promised by government officials.

The Petroleum Industry Bill (PIB), which is expected to amend
the country’s long relationship with its foreign oil partners and vary almost
everything from fiscal terms to the structure of the Nigeria National Petroleum
Commission, NNPC, has become synonymous with missed deadlines.

The PIB, which is a long and in-depth bill, a historic, critical
and extensive bill encompassing the 16 hitherto existing laws with the oil and
gas industry, has been delayed since the draft bill was made available in 2009.

In the latest setback, lawmakers have delayed this week’s clause
by clause debate on the PIB until March 15, as some senators said they were not
given adequate time to look over the latest draft of the bill, knowing too well
that they are due to go on recess on March 16 and won’t return until after the
elections.

Last week, Diezani Alison-Madueke, the minister of petroleum,
had expressed optimism that the bill would be passed in April, if all things go
as planned.

“We are very expectant. The Senate and the House of
Representatives are passionate and eager to move this bill forward and they
both want it out in the shortest possible time” she said.

“Another draft has been submitted to the National Assembly with
slight modifications. The NNPC MD announced in mid-February the bill will
become law before the president’s tenure expires,” Mr. Rewane said, adding that
circumstances have contradicted this assertion.

One of the major benefits of this bill is that transparency in
the oil and gas industry would be achieved, besides addressing issues such as
funding shortfalls at its joint ventures with foreign firms, insecurity in the
Niger Delta, increasing local involvement in the industry, and production of
more gas for domestic power.