By Margaret Nongo-Okojokwu
The Nigerian National Petroleum Corporation, NNPC, in partnership with a local firm, ND Western, has bought a block onshore the Niger Delta operated by Shell. NNPC said in a statement that the block, Oil Mining Lease -OML 34, is one of the three blocks Shell has put on the auction block this year onshore Nigeria.
NNPC said that the deal is “a major milestone in the oil and gas sector. According to the Corporation, “The taking over of Oil Mining Lease (OML) 34 by the Nigerian National Petroleum Corporation and ND Western (is) part of measures to grow the in-country upstream capacity of the petroleum industry,” the statement said.
NNPC takes 55% and ND Western 45% of the block from Shell Petroleum Development Corporation, a Shell-run joint between NNPC, with 55%; Shell, with 30%; EPNL, with 10%; and Agip, with 5%.
Shell has been winding down some of its onshore operations to focus on offshore and deepwater drilling. The sales follow similar divestments over the past two years. The company said last month it was seeking buyers for OMLs 30, 34 and 40. Shell’s onshore facilities are plagued with problems such as militancy and rampant oil theft, although the firm says such problems have not influenced its divestment plans.
In 2011 Shell sold its 30% stake in Nigerian onshore oil block OML 42 to local consortium Neconde Energy – which includes Nestoil Group, Aries E&P Company Limited, VP Global and Poland’s Kulczyk Oil Ventures – for $390 million. Also In the same year, it divested its 30% stake in block OML 26 to First Hydrocarbon Nigeria (FHN), which is part-owned by Afren, for $98 million. The sale to the Neconde consortium is causing a bit of an uproar with former Shell employees on OML 42, with various charges being laid against Neconde for non-payment of salaries.
This move is part of the Federal government’s bid to boost local participation in the oil industry, although critics say the NNPC lacks the funds to invest sufficiently in its own assets. The statement said the sale of the block “would give indigenous companies … the impetus to become an active player in the … oil and gas sector.”