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Chinese in £3bn battle to buy Shell assets in Nigeria

The Times

December 21, 2009

Two Chinese government-controlled companies are among front-runners in a £3 billion battle for control of oil assets in Nigeria that have been put up for sale by Royal Dutch Shell.

Both Sinopec and China National Offshore Oil Corporation (CNOOC) are understood to have expressed interest in the fields, which the Anglo-Dutch group has put up for auction as the violence-prone African nation prepares to impose tougher terms on foreign oil operators next month.

The sale of a string of onshore oilfields by Shell, the biggest foreign oil company in Nigeria, represents a significant shift in strategy by the oil giant since the appointment of its new chief executive, Peter Voser, in July.

Industry insiders said that Shell, which has been struggling for years to maintain production levels in Nigeria amid widespread sabotage, theft and piracy, had commenced discussions about the sale of a number of its smaller producing fields, as well as undeveloped blocks and fields in which production has been curtailed by security troubles.

Shell is not leaving Nigeria and is keen to keep the bulk of its operations in the country. Neither is it selling any of its offshore interests, which are less vulnerable to rebel attacks and piracy.

Insiders said the fields have drawn interest from a variety of international groups, as well as CNOOC and Sinopec. Indian companies are thought to be interested and UK-based independent oil explorers, including First Hydrocarbon Nigeria, part of London-listed Afren, are studying the opportunity.

An insider familiar with the talks said that Shell was likely to sell the fields in individual transactions in the first half of 2010. He said: “We are talking about a few different fields. These are smaller, onshore and more marginal assets that they are not really interested in developing themselves any more.”

Neither CNOOC or Sinopec could be reached for comment yesterday.

Shell is focusing on big developments such as the Pearl gas-to-liquids project in Qatar and the Perdido deepwater well in the Gulf of Mexico.

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