Shell Petroleum
Development Company (SPDC) has declined to speak on the progress of the
bidding process of its oil blocks that have been offered for sale.
Although names of
interested companies have already been mentioned in newspapers, local
and foreign, the bidding process for the sale of its oil blocks have
started, and the planned sale of some oil blocks belonging to the
company got underway in its London office last week with the opening of
negotiations with some of the companies that bid for the oil blocks.
However, Precious
Okolobo, one of the spokespersons of the company, said a statement
would be issued at the right time. “At the right time, the company
would let the public know exactly what is happening,” adding that most
of what have been reported so far is based on speculations.
Shell has been embarking on some divestures since last year with some oil experts saying several reasons may have led to this.
Dragan Trajkov, an
analyst at Renaissance Capital, an investment bank, says there are
several reasons why Shell might have decided to shift its operations
towards deep offshore and divest some of the onshore assets.
He added that it is
no secret that Shell has had a very difficult time to establish a
healthy working relationship with the local population. For instance,
its stations in Ogoni in the Niger Delta are still shut.
Experts believe
that the potential Petroleum Industry Bill and the already passed Local
Content Bill might have had some impact on their decision, especially
the fact that the early version of the PIB proposed that the majors may
be required to relinquish some of the undeveloped fields.
Last January, Shell
sold some of its Nigeria assets to a consortium led by local companies.
The company then stated that it agreed to transfer its interest in
three production licences and related equipment in the Niger Delta to a
consortium led by two Nigerian companies.
“This sale of
assets supports the Nigerian government’s goal of expanding
opportunities for local energy companies,” Mutiu Sunmonu, managing
director, SPDC, said.
In October last
year, Afren announced the acquisition of the OML26 block in Nigeria,
from Shell, with its shares gaining about 14 per cent the same day.
What’s up for sale?
Although not
publicly announced, a Renaissance capital report states that in this
round, Shell is looking to divest its 30 per cent interest in the
following Nigerian blocks: OML30, OML34, OML40 and OML42.
“We estimate that
on a gross basis these blocks combined may contain approximately 2.5mn
barrels of remaining oil resources (750mn barrels net to Shell) aside
from gas,” Mr. Sunmonu said.
According to him,
some of the discoveries on these blocks started production in the
1960s. However, at present, the majority of production appears to be
shut-in.
“In line with the
current production/reserve ratio of the five oil majors in Nigeria, we
estimate that the remaining oil resources in these blocks have the
potential to ramp up to approximately 300kbblpd of gross production,”
he said.
Industry watchers
say although many consortia have been formed and that as many as 18
have been mentioned, most appear to include an indigenous company and
one or more international partners with good financial backing. The
winners are to be announced in March.
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.
It is believed that
the actual potential will be a lot clearer once the winners are
announced and more detailed technical data are made publicly available.
