Shell Tells Nigeria of Interest in Buying Some Chevron Oil Blocks
LONDON -Royal Dutch Shell PLC has notified the Nigerian government that it is interested in buying some of U.S. firm Chevron Corp.’s Nigeria oil licenses, said a senior Nigerian government official Thursday.
The move would be a rare acquisition by an international energy company in Nigeria, where oil companies have in recent years generally exited acreage amid mounting security risks. It could also herald Shell’s exit from long-dormant oil assets in the Ogoniland region, where strident local opposition to its presence has prevented the company from producing oil since the 1990s.
“Shell has signalled it wants to sell some blocks,” the government official said. “Shell is also interested in Chevron blocks in the swamps.”
Shell said Thursday that it is carrying out a “strategic portfolio review” that could lead it to sell leases in the eastern Niger Delta that currently give the company between 80,000 and 100,000 barrels a day of oil equivalent.
Shell Chief Executive Peter Voser said that while Shell would reduce its presence in some parts of the Delta, particularly the east where “sabotage is clearly a great concern to us,” it would still invest in others.
“We will not leave the onshore completely,” said Mr. Voser. “In the more pure oil play, in the eastern part, we will be less represented over time, but it doesn’t mean we go out of onshore.”
The Anglo-Dutch oil company has put four of its own Niger Delta oil blocks up for sale, including two oil blocks in Ogoniland, two people close to the sale process said.
“Shell has informed potentially interested local players that the blocks OML 13, 16, 71 and 72 are for sale,” said one of the people, adding that the sales could fetch between $1 billion and $1.5 billion in total.
Buying Chevron’s blocks would effectively allow Shell to reduce its presence in the more challenging areas while retaining enough assets to feed Shell’s existing pipelines. Blocks OML 13 and 16 lie in Ogoniland, where opposition following Nigeria’s execution of local environment campaigner Ken Saro-Wiwa in 1995 has played a large part in preventing the company from resuming production.
Shell has already sold off other assets in the Niger Delta, where it has maintained the longest presence of any foreign oil company. Last year, Shell agreed to sell its most prolific oil block to a local consortium backed by U.K. explorer Heritage Oil HOIL.LN -1.20% PLC (HOIL.LN) for $850 million.
Shell’s local joint venture doesn’t want to leave the Delta region, however, said a person familiar with Shell’s thinking.
The Shell-led joint venture, Shell Petroleum Development Company of Nigeria, could put Chevron’s assets in the region to good use, he said.
“Chevron’s fields are better secured and still have plenty of oil in them,” the person said.
Shell is the operator of SPDC’s assets and owns 30% of the joint venture. Its partners include the state-owned Nigerian National Petroleum Corp. with a 55% stake, France’s Total SA (TOT) with 10% and Italian firm Eni with 5%.
Chevron and Total declined to comment, and Eni wasn’t immediately available for comment.