Federal Government declares Shell can't sell oil fields

The Federal Government has said Royal Dutch Shell Plc has no powers to sell the assets it owns jointly with the Nigerian National Petroleum Corporation (NNPC).

The Shell/NNPC Joint Venture covers 90 oil fields, spanning 30,000 square kilometres, 72 oil-pumping stations, 10 gas plants and two major oil export terminals at Bonny and Forcados, according to a company fact-sheet. Sunday Times of London had reported that Shell planned to sell fields valued at up to $5 billion as Nigeria prepares to impose harsher terms on foreign operators and hand greater control to domestic oil firms, through the Petroleum Industry Bill (PIB), currently before the National Assembly.

Potential buyers may include China's Sinopec and Nigeria's Oando Plc, the newspaper said. But the Minister of Petroleum, Dr. Rilwanu Lukman, said yesterday that the company would need government's approval to sell the oilfields. "It's not theirs to sell," Bloomberg news agency quoted Lukman as saying by phone from Abuja yesterday.

"They're holding concessions given them by the government," Lukman added. The minister insisted that Shell would require government's approval before pressing ahead with a sale, adding that no such request had been made, as far as he is aware. Wendel Broere, a spokesman at The Hague-based Shell, declined to comment, according to Bloomberg. Minister of State for Petroleum, Mr. Odein Ajuomogobia, also told journalists in Lagos yesterday that government was not concerned over plans by other oil companies to sell their assets in the country owing to the harsh terms contained in the PIB. He argued that the world is a big place; as one company is leaving the country, another one is coming into the country.

"You know we are a sovereign country; we make our laws for ourselves and for those foreigners, who wish to do business with us. We will take account of international norms and practices to ensure that our laws are favourable for investment. It is in our own interest to have laws that attract investment. So, we will do everything we can to make sure that the PIB, when it is passed into law, is a law that makes Nigeria destination for foreign investment. Now, if there is any group of investors, who feel that the laws we make do not serve their interests - the world is a very big place and as one goes, another comes. So, I am not really concerned about that," he said. Ajumogobia also told Reuters yesterday that Shell, Europe's largest oil company, had not informed the government of any such plans.

"It is indeed curious, if the reports making the rounds in this regard are true, that Shell seem so keen on renewing their expired shallow water leases. We certainly intend to make a formal inquiry," he said. Shell's operations were the worst hit by the activities of militants in the oil-producing Niger Delta that started in 2006. The reform bill presented by President Umaru Musa Yar'Adua to the National Assembly seeks to give the government greater powers over oil concessions while raising taxes paid by energy companies. Licences for 16 fields operated by Shell, Exxon Mobil Corporation, Total and Chevron Corporation in the past four decades are currently up for renewal.

Only ExxonMobil, world's largest publicly-traded oil company, has so far obtained a renewal for three licences while Shell and Chevron are continuing negotiations with the government.

THISDAY reported that worried by uncertainty in the PIB, more International Oil Companies (IOCs) had suspended new investments, especially in deep offshore, where the controversial PIB imposes stiffer conditions on the operators. It was gathered that the unresolved issues in the bill and the uncertainty over its passage have forced the IOCs to adopt a "wait - and - see" attitude on new projects, with some of the companies making moves to relinquish some of their assets.

Uncertainty over the content of the PIB was also a source of worry to both local and foreign operators, who identified the circulation of many versions of the bill, provision for higher royalty payments, multiple taxes on profits and revenue sharing as main areas of dispute. The operators are also opposed to the provisions, which allow the government to renegotiate old contracts, impose higher costs on oil companies and retake oil fields that oil companies are yet to explore. With these provisions, the deep offshore assets of Shell, Chevron, ExxonMobil and Total are being threatened.

This Day

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