Home Business News Shell opens negotiations with oil firms on sale of licences

Shell opens negotiations with oil firms on sale of licences



Shell Petroleum Development Company (SPDC), has commenced negotiations with some local oil Exploration and Production (E&P) companies on its planned sale of its Nigerian oil licences in the Niger Delta region, conservatively valued at about $2 billion.

Specifically, the Anglo-Dutch petrochemical giant, is reported to be in talks with the Nigerian industry operators about selling its oil mining licenses 11 and 17 to them.

According to sources in the know of the negotiations, the sale could involve selling essential infrastructure assets, including a natural gas-fired power plant that is expected to be managed Transactional Corporation of Nigeria Plc. (Transcorp).

It was also gathered that the initial talks between the SPDC team and the local buyers were at an advanced stage but that making progress on the deal has been hampered by funding constraints and some regulatory requirements.

But then, the sources projected that the Shell team and the Nigerian potential buyers appeared set to conclude the deal within the next three months.

Available official records on OML 17 indicate that the licence is in the JV category involving NNPC and Shell and it comprised 15 oil and gas fields, out of which six are producing oil now.

The OML 11, which is one of the biggest blocks in South East part of Niger Delta region, has 33 oil and gas fields, eight of which active as at last year.

According to sources, the Federal Government has divided the block into three portions last April, offering one to Shell after it confirmed renewal of its production licence.

It was gathered that one of the reasons why Shell is divesting from the blocks had to do with local oppositions, militant activities, civil conflict, and allegations of environmental pollution.

Analysts project that if the two licences are sold, the Anglo-Dutch oil giant would have reduced its exposure to risks in Nigeria’s upstream investments and focus on its deepwater operations where the frequency of theft and threat of attacks on infrastructure are minimal.

Shell ‘s investments in Nigeria’s hydrocarbon resources industry dated to 1936 when Shell D’Arcy was set up. Two years later, the company was granted an exploration licence and in 1950, after discovering oil in the region, Shell became one of the biggest producers in West Africa.