Shell Concludes Sale of Oil Blocks to Aiteo, Erotron, Others

Ejiofor Alike with agency reports

Royal Dutch Shell has concluded the sale of its four Nigerian onshore oil blocks – Oil Mining Leases (OML) 18, 24, 25 and 29 – in addition to the Nembe Creek Trunk Line (NCTL) - which it put up for sale following a 2013 review of its business in the country.

In an effort to reduce its exposure to onshore operations, which are more prone to security threats, Shell is divesting 30 per cent of its interest in the four blocks, while Total and ENI are selling 10 per cent and five per cent, respectively.
Fifty-five per cent will be retained by the Nigerian National Petroleum Corporation (NNPC) under a Joint Operating Agreement (JOA) with the new buyers.

The divestment is also part of the Anglo/Dutch giant’s plan to dispose of $15 billion of assets globally in 2014 and 2015.
The sale of these four assets will bring the number of oil blocks sold by Shell to 12 in the last four years, as the oil major had previously sold OMLs 4, 38, 41, 26, 30, 34, 40 and 42 to local investors and their international partners.

Of the eight oil fields previously divested by Shell, only OMLs 4, 38 and 41 are operated by the new buyer, Seplat Petroleum Development Company, while the operatorship of the other five blocks were transferred to the Nigerian Petroleum Development Company (NPDC), the upstream subsidiary of NNPC.

Under the current divestment programme, THISDAY learnt that Shell signed a share purchase agreement (SPA) with the Aiteo Group, which is acquiring OML 29, the most prolific of the oil assets offered to buyers, and the Nembe pipeline last Friday in Lagos.

Other partners in the Aiteo Group-led consortium include Tempo Energy Resources, which has a 10 per cent stake and Taleveras with five per cent equity in the consortium.

The disposal of the Nembe pipeline, which moves oil through the Niger Delta to the Atlantic coast, is seen as Shell’s biggest move yet to exit onshore crude production in Nigeria.

The 60-mile Nembe Creek Trunk Line is 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.

The company also said yesterday that alongside its partners, Total and Eni, it had signed an SPA to sell 45 per cent in OML 18 to a consortium led by Canadian oil and gas company Mart Resources.

Reuters reported that Mart confirmed that it had entered into an agreement yesterday for the acquisition of OML 18, whose production it said ranged between 20,000 to 30,000 barrels per day from around 30 wells.

Mart Resources is part of the Erotron consortium that won the bid for OML 18. Its other partners include indigenous operator Midwestern Oil and Gas and Suntrust Oil.

The sale process “has not yet fully concluded but we can confirm that we have now signed the share purchase agreements for these oil mining leases and the NCTL,” a Shell spokesman said.

“Nigeria remains an important part of Shell's portfolio, where we will continue to have a significant onshore presence in oil and gas, and which has clear growth potential, particularly in deep-water and onshore gas,” he added.

For OML 18, the Erotron consortium was reported to have offered $1.2 billion for the oil block; Aiteo offered $2.562 billion for OML 29 and the Nembe pipeline; Pan Ocean Corporation Nigeria Limited offered to pay $900 million for OML 24; while Crestar secured OML 25 having offered $500 million for the oil asset.

However, despite the execution of the SPAs between Shell and the buyers, the transactions would only be deemed truly sealed after a ministerial consent is granted by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, as provided by the Petroleum Act.

The buyers contacted by THISDAY expressed confidence that the minister would sign off on the deals soon.
 

Culled from thisdaylive.com