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Nigeria Says Shell Will Need Government Approval to Sell Assets

BLOOMBERG

By Dulue Mbachu

Dec. 21 (Bloomberg) — Nigeria’s Oil Minister said Royal Dutch Shell Plc will need government approval to sell oilfields following a report that it plans to sell as much as $5 billion of assets in the West African nation.

Shell, Europe’s biggest energy company, is planning to sell stakes in several onshore Nigerian oilfields, the Sunday Times reported yesterday. Potential buyers may include China’s Sinopec and Nigeria’s Oando Plc, the newspaper said.

“It’s not theirs to sell,” Minister of Petroleum Rilwanu Lukman said by phone from Abuja today. “They’re holding concessions given them by the government.”

Shell’s onshore facilities bore the brunt of recent attacks by militants seeking a greater share of Nigeria’s oil wealth. Legislation before parliament will impose tougher conditions on international producers active in the country as Shell undertakes a global review of its operations to cut costs.

Shell would require government approval before pressing ahead with a sale, Lukman said. No such request has been made, as far as he’s aware. Wendel Broere, a spokesman at The Hague- based Shell, declined to comment.

Shell’s operations were the worst hit by an upsurge of armed attacks in the oil-producing Niger Delta that took place from 2006. More than 25 percent of Nigeria’s oil output was shut through pipeline bombings and kidnapping of oil workers. The violence has abated since an amnesty was implemented.

Greater Powers

An oil industry reform law presented by President Umaru Yar’Adua to parliament seeks to give the government greater powers over oil concessions while raising taxes paid by energy companies.

Licenses for 16 fields operated by Shell, Exxon Mobil Corp. and Chevron Corp. in the past four decades are currently up for renewal. Only Exxon has so far obtained a renewal for three licenses while Shell and Chevron are continuing negotiations with the government.

Shell is reviewing its operations around the world after the recession curbed fuel demand and dragged down prices. It may put a fourth refinery in Europe up for a sale and has already signed a letter of intent to sell its New Zealand downstream assets.

Nigeria, which vies with Angola for Africa’s top oil producer, has hydrocarbon reserves of about 36 billion barrels of crude and 187 trillion cubic feet of gas, according to the Petroleum Ministry. The West African nation is the fifth-biggest source of U.S. oil imports.

Shell is the oldest and largest international energy company in Nigeria, according to the company’s Web site. Its Nigerian subsidiary, Shell Petroleum Development Co., is the operator of a joint venture in which state-owned Nigerian National Petroleum Corp., or NNPC, holds a 55 percent stake. Shell holds 30 percent, followed by Total with 10 percent and Eni SpA with 5 percent.

The joint venture run by Shell covers 90 oil fields, spanning 30,000 square kilometers, 72 oil-pumping stations, 10 gas plants and two major oil export terminals at Bonny and Forcados, according to a company fact-sheet.

To contact the reporters on this story: Dulue Mbachu in Lagos at [email protected]

Last Updated: December 21, 2009 09:42 EST

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