Thursday, December 8, 2011

Shell, Eni buy Nigeria offshore oil field rights

LAGOS, Nigeria (AP) — Royal Dutch Shell PLC and Italian oil firm Eni SpA have purchased rights to an offshore oil field near Nigeria's coast that could hold as much as 9 billion barrels of oil, the companies said Thursday.

The purchase ends a long dispute over who would run the field held by a company with ties to a former oil minister during the military rule of Sani Abacha, whose kleptocratic rule saw billions stolen from Nigeria. It also signals oil firms remain willing to expand in Nigeria, despite unease over a long-running debate about changing the laws that govern crude production in a nation vital to U.S. energy supplies.

The oil field sits near French oil firm Total SA's Akpo offshore field, more than 100 miles (150 kilometers) off the coast of Nigeria's Rivers state. Experts believe the field holds oil reserves that would put it among some of the top fields in the world.

In separate statements, Shell and Eni confirmed the purchase of the fields. Shell said the field's production would be split 50-50 among the two companies, with Eni running the operations of the deep-water oil drilling and production.

Neither company disclosed the price it paid for the field. A spokesman for the state-run Nigerian National Petroleum Corp., which partners with foreign firms working in the country's oil fields, did not respond to a request for comment Thursday.

The sale ends an ongoing dispute between Shell and local company Malabu Oil and Gas, which has links to former Nigerian oil minister Dan Etete who served in Abacha's regime in the 1990s. Shell had earlier been signed to produce oil there under Malabu, but the deal fell apart and the two firms became entangled in lawsuits.

It remains unclear how the deal was brokered, but both Eni and Shell said they did not enter into any deals with Malabu Oil and Gas to close the deal. Shell also said it paid its portion of the sales price to the federal government.

The deal comes as Nigeria still considers whether to overhaul laws surrounding oil production. Debate over the Petroleum Industry Bill had caused foreign companies to hold off on new investments in Nigeria. Analysts say the petroleum bill would sharply reduce the profits of foreign oil companies like Chevron Corp., ExxonMobil Corp., Eni, Shell and Total.

Government officials say the bill would allow more oil money to return to Nigeria's people.

However, the bill has apparently stalled after years of discussion and it remains unclear whether Nigeria's National Assembly will be able to pass any change to the laws soon.

Nigeria, an OPEC member nation producing about 2.4 million barrels of crude oil a day, is a top supplier to the U.S.

Production in the country picked up in recent years after a government-sponsored amnesty deal brought many militants in the region out of its winding creeks. However, thefts from oil pipelines have grown drastically and some ex-fighters have become disenchanted with the amnesty program.

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