Shell Petroleum Development Company of Nigeria Ltd (SPDC), Total Nigeria Ltd (Total) and Nigeria Agip Oil Company Limited Wednesday sold 45 per cent stake in OML 26 in a deal with a Nigerian company in what oil operators attribute to fear of political instability in Nigeria.
Oil sources said the new deal was reached not because of the controversy around the Petroleum Industry Bill which is still with the National Assembly.
The remaining 55 per cent is owned by the NNPC.
"They are reducing their investments in Nigeria because of the situation in Niger Delta and the political instability they foresee in 2011," a source added.
Earlier this year, the Nigerian joint venture company operated by Royal Dutch Shell Plc agreed to sell its 30% interest in three oil production licenses to a consortium led by Nigerian companies for an undisclosed sum.
First Hydrocarbon Nigeria Limited (FHN) Wednesday announced that it has reached a Definitive Agreement with Shell Petroleum Development Company of Nigeria Ltd, Total E&P Nigeria Ltd and Nigeria Agip Oil Company Limited for the acquisition of a 45 per cent interest in OML 26, Delta State onshore Niger Delta. The remaining 55 per cent stake remains the property of the Nigerian National Petroleum Corporation (NNPC).
First Hydrocarbon Nigeria said in a statement: "FHN has today announced the acquisition of a 45 per cent interest in OML 26, which holds two producing and three proved undeveloped fields, from the SPDC JV in Nigeria. Total independently certified recoverable reserves and contingent resources are 184 million barrels.
"Located onshore the Niger Delta the Ogini and Isoko fields are currently producing approximately 5,000 bpd gross from a limited number of currently active drainage points, with significant potential for further development. Existing flow station capacity for the fields is currently 30,000 bopd. FHN's forward work programme across three phases is expected to increase production to more than 40,000 bpd over the next four years. The transaction is subject to the approvals of the Federal Government of Nigeria and NNPC."
The company said it intends to list on the Nigerian Stock Exchange in the future, providing an opportunity for all Nigerians to invest in the sector.
FHN will make a net investment of $187.5m in OML 26, which includes both the acquisition cost and FHN's equity share of the phased development.
FHN will assume operatorship, with Afren acting as technical service provider to FHN.
Afren says it has also agreed terms with BNP Paribas for a $130m credit facility towards the acquisition cost.
The deals show how oil companies are shifting their focus away from Nigeria, a source said.
Shell had said earlier that it no longer expects Nigeria which has been one of its oil ally for decades to drive output growth for the company.
iolence, kidnapping and attacks on oil infrastructure in Niger Delta and the recent bomb explosions have made the oil majors to develop cold feet about Nigeria, experts say.
The multinational oil companies such as Shell, ExxonMobil, Chevron, Total, Agip, Addax that operate Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC) did not participate in the last oil bid round in 2007.
Experts in oil and gas who spoke at the just concluded economic summit in Abuja expressed fears that oil investments in Nigeria are going southward.
They say drilling is falling. investment is drying up, production is falling and so too are profits.
Whereas there have been three final investment decisions (FIDs) in Angola this year alone, there has not been any significant FID in Nigeria in the last three years.
According to them, if the current fears are not resolved, Nigeria should expect no investment from off shore.
