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allAfrica.com: Nigeria: Oando Acquires 2 Shell Oil Blocks for $625m

This Day (Lagos)
26 February 2008
Chika Amanze-Nwachuku

Indigenous oil marketing company, Oando Plc, has acquired Shell Nigeria’s 49.8 per cent stake in two oil blocks for $625.7 million.

Oando emerged the preferred bidder of the two deepwater blocks offshore Nigeria Oil Mining Lease (OML) in an international competitive bidding process. The company made an immediate payment of 10 per cent of the sum last Friday while the balance will be paid when the transaction is finalised.
 
An international newspaper had late last year reported that another Nigerian company, African Petroleum Plc, indicated interest in the oil blocks.

The decision of Royal Dutch Shell to sell its stakes in the two blocks, THISDAY learnt, was sequel to its plan to reduce its business in the troubled Niger Delta region where the company currently loses about 200,000 barrels per day of production.

The two stakes owned through Shell Nigeria Exploration and Production Co. Ltd are in deep water blocks OML-125 and OML-134, formerly known as OPL-211.

Agip, a unit of Eni, owns the remaining 50.2 per cent in each block.

Commenting on the transaction yesterday, Group Chief Executive, Oando, Mr. Wale Tinubu, said OML-125 currently produces 18,000 barrels a day of oil from the Abo field combined with near term production growth and high potential exploration acreage to complement Oando’s existing upst-ream position. Tinubu said OML-134 although still in exploration phase, has already recorded significant discoveries.

“The consideration payable is US$625.7 million in cash which will be settled in two tranches. An immediate payment of 10 per cent was paid on Friday, 22nd February whilst the balance will be paid on completion. The consideration and any adjustments will be funded from both internal cash resources and from external financing. Standard Chartered, Standard Bank, BNP Paribas and Merrill Lynch are providing financing to Oando for this transaction. Standard Chartered Bank acted as financial advisors to the transaction. We are pleased to have emerged as the preferred bidder in this competitive international bid. This milestone underpins our preparedness and capability to develop a sizeable upstream portfolio,” he said.

Commenting further, the Oando MD said: “We have been fortunate to be presented with the rare opportunity to acquire a balanced upstream portfolio in our home market in line with our stated principle to acquire proven, active and near term properties. Our ability to marshal substantial resources to win a bid of this magnitude further reinforces our status as sub-Saharan Africa’s leading integrated energy group. We are proud of this development and the positive impact on indigenous corporate Nigeria’s profile in the global oil and gas community.”

A spokesman of Shell Nigeria, Mr. Precious Okolobo, confirmed last night that the deal received the nod of the Nigerian government and the waiver of pre-emption rights by the operator, Agip. “We can confirm that we have reached agreement with Oando Plc for the purchase of Shell’s interest in these blocks [OMLs 125 and 134]. The deal is subject to approval by the Nigerian government and the waiver of pre-emption rights by the operator, Agip, and we cannot comment further,” Okolobo said. The oil major had late last year announced the planned restructuring of its Nigerian business to the effect that all the company’s affiliates will come under “one Shell structure”.

In line with the restructuring exercise, Shell Group had also last year disclosed plans to sell its interests in the Nigerian offshore blocks in a move aimed at reducing its business in the troubled Niger Delta region. Until yesterday, Shell Nigeria neither confirmed the planned sale nor the reported plan by AP to purchase the oil blocks. However, reacting to alleged plans by Shell and other oil majors to divest from Nigeria, Paolo Scaroni, Chief Executive of Apip, a unit of Eni SPA, holders of the remaining 50.2 per cent, argued that the Niger Delta crisis was not enough reason for oil majors to leave the country.

“The situation in Nigeria certainly isn’t peaceful, but I don’t think it is such as to push oil majors to leave,” Scaroni had said. The planned reorganisation by Shell Nigeria, believed to be the first of its kind since the company commenced exploration activities in Nigeria over five decades ago, has been suspended reportedly on the directives of the Federal Government.

http://allafrica.com/stories/200802260263.html

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1 Comment on “allAfrica.com: Nigeria: Oando Acquires 2 Shell Oil Blocks for $625m”

  1. #1 Mr Michael
    on Mar 19th, 2008 at 06:50

    I came accross your contact details on your internet website.I represent a potential buyer who is ready to do business with a legal company that has well confirmed alocation and who has crude oil to sell.We would start talking business if you can send us your company profile and substanciate the availability of your product.

    Please do respond is you are interested.

    Thank you.

    Mr Michael.

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