Sunday, December 27, 2009

Western Oil Firms May Not Renew Nigerian Licenses--Shell to Sell Oil Fields

Daily Trust (Abuja)

Nigeria: Western Oil Firms May Not Renew Nigerian Licences--Shell to Sell Oil Fields

Jibrin Abubakar and Mohammed Shosanya
21 December 2009

Lagos — Western oil companies may not renew their operational licences in Nigeria, as Royal Dutch Shell launched a shake-up of its operations in Nigeria by offering oilfields valued at $5 billion for sale.

This, according to sources is coming owing to their dissatisfaction with the handling of the oil sector by the Nigerian government. They are also concerned about how the deregulation policy will work.

While the National Assembly is said to have promised to pass the Petroleum Bill into law before the end of this month, the date for the take off of deregulation is unknown.

Royal Dutch Shell, Exxon Mobil, Total and Chevron, which have dominated Nigeria's energy sector for decades, have criticised the Petroleum Industry Bill (PIB), saying it could threaten billions of dollars of investment if it goes ahead in its current form.

Sources also say they are also concerned about Nigeria's new oil ally-China. China has offered to invest $50 billion for acquiring 6 billion barrels of oil reserves in the country.

"Chinese people are not buying fields...they want to acquire reserves in Nigeria. Specifically the application was to acquire reserves of 6 billion barrels which we are currently discussing. They are prepared to spend as much as $50 billion," special advisor to President Umaru Musa Yar'adua on energy matters, Emmanuel Egbogah had said.

Spokesman of the Shell Petroleum Development Company (SPDC) Precious Okolobo, however said he could not comment on the matter when contacted on phone yesterday.

But the General Manager, Government and Public Affairs of Chevron Nigeria Limited(CNL) Femi Odumabo told this paper in a telephone interview that his company and other multinational oil companies are currently engaging in discussion with the Federal government and its relevant agencies on the Petroleum Industry Bill and the deregulation policy.

He did not comment on whether or not his company and other multinational oil companies would not renew their operating licence 'due to the issue at hand'.

"Discussions on the issue are currently ongoing with the Federal government. We are engaging in discussion with relevant government officials and agencies", he said.

Public Affairs Advisor of ExxonMobil Mr Yemi Fakayejo could not be reached on phone for comments.

Some provisions of the Petroleum Industry Bill specify that NNPC's main joint-ventures with Shell, Chevron, Total, ExxonMobil, and Agip would also be restructured into independent companies with new management when the bill becomes law leaving the companies with much uncertainty on how the new companies will operate, who will manage them, and how profits will be shared.

At the public hearing for the bill in August this year, Managing Director of Chevron Nigeria Limited Andrew Fawthrop said,"Some of the provisions in the bill are still open to interpretation. It is very important that we clarify that before it is codified".

Mark Ward, the Managing Director of Exxon Mobil Nigeria, said that the Bill, presently implied that all new planned (upstream) projects would be uneconomical, stressing that his company planned to invest $60 billion in Nigeria over several years. Another multinational oil company has recommended more than 200 amendments to the bill, while others have privately spotted dozens of concerns to the NNPC.

Amidst speculation that western oil companies are refusing to renew their licences, Royal Dutch Shell is auctioning its oilfields valued at up to $5 billion for sale. The auction comes as the National Assembly prepares to pass into law the controversial Petroleum Industry Bill (PIB).

Royal Dutch Shell, Exxon Mobil, Total and Chevron, which have dominated Nigeria's energy sector for decades, have criticised the Petroleum Industry Bill, saying it could threaten billions of dollars of investment if it goes ahead in its current form

Shell is the biggest western oil firm in Nigeria, the world's tenth largest producer, and has had operations here for 70 years.

It is understood that the company recently launched a formal sales process that is being overseen by Ann Pickard, head of Shell Nigeria, Times online report.

"They have been talking about this for a while but it has now kicked off," said a source close to the situation. "They are inviting proposals and circulating technical data on their fields." Shell's decision to reduce its reliance on Nigeria, which was once its primary growth engine, signals a huge shift, Times online report.

For decades it has been a mainstay of an industry that accounts for more than three-quarters of the Nigerian economy. It persisted despite rampant piracy and a long-running campaign of violence by militants against foreign workers.

The growing violence and a souring of relations with the government in recent years led the company to invest billions elsewhere to offset its dependence on the country.

With new projects in the Gulf of Mexico and Qatar near completion, it is understood that Peter Voser, Shell's chief executive, is now keen to reduce its position in Nigeria.

Sinopec, one of China's state-owned oil groups, has requested information. It is thought that indigenous companies such as Oando, Nigeria's largest independent group, and London-listed Afren, could also pick up some fields.

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