Shell sells $737million of Nigerian upstream oil assets

March 20, 2015 | Asset Acquisitions & Divestitures, Nigeria

Lagos, Nigeria | – The Shell Petroleum Development Company of Nigeria Limited (SPDC), a subsidiary of Royal Dutch Shell plc (Shell), has completed the sale of its 30% interest in oil mining lease (OML) 18 and related facilities in the Eastern Niger Delta. Its interests in OML18 were sold to Eroton Exploration & Production Company Limited. Total cash proceeds for Shell amount to $737 million.

Shell, which last year said it lost nearly $1billion from the rampant oil theft and sabotage in Nigeria, offloaded its 30% interest in oil mining lease 18 and related facilities in the Eastern Niger Delta.

The oil mining lease covers an area of 1,035 square kilometres and includes the Alakiri, Cawthorne Channel, Krakama, and Buguma Creek fields and related facilities, which produced on average around 14,000 barrels of oil equivalent per day during 2014.

The Anglo Dutch oil giant said the divestment is part of the strategic review of SPDC’s onshore portfolio and is in line with the Federal Government of Nigeria’s aim of developing Nigerian companies in the country’s upstream oil and gas business.

Although Nigeria accounts for almost 10% of the group’s output, the local government has proposed legislation that has had curbed investment, Shell said last year, hindering production, while oil theft was “very material”.

Shell has operated in Nigeria for more than 50 years and stressed that it remained committed to keeping a long-term presence in the country, both onshore and offshore.

Related facilities sold along with the licence include flow stations and their associated gas infrastructure, as well as oil and gas pipelines.

Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited have also sold their interests of 10% and 5% respectively in the lease, ultimately giving Eroton Consortium a 45% interest in OML18.

NOGTEC gathered that Shell has received all approvals from the relevant authorities of the Federal Government of Nigeria.