Shell to sell Nigeria fields

OIL giant Royal Dutch Shell could sidestep tougher restrictions on foreign companies in Nigeria and constant violence against its workers by selling its onshore assets in the turbulent African country in deals that would deliver the company an estimated £3bn.

Shell yesterday declined to comment on reports that it had already put some of its Nigerian assets on the block.

The Anglo-Dutch group, which this year outlined its concern about safety for oil workers and property in Nigeria, has reportedly instructed Ann Pickard, Shell’s highest ranking Nigeria-based executive, to explore avenues for disposals.

In the running to pick up the oil fields are Sinopec, China’s state-owned oil company, as well as Nigerian group Oando and London-listed Afren.

Any exit from Nigeria would pre-empt moves by the government there to extract more from foreign fuel companies by forcing them to pay company tax for the first time and a new hydro carbon tax.

The clampdown could cost oil companies billions of dollars a year.

Selling oil fields would mark a change in strategy for Shell, which has been actively reducing its “downstream” functions through the sale of a number of oil refineries.

Shell plans to offload about 15 per cent of its global refining capacity, or about 600,000 barrels a day of capacity in the next three years as part of its restructuring program aimed at increasing profitability.

In September it sold operations in Greece for about €260m (£230m).

Shell plans to have invested $31-$32bn (£19-£20bn) by the end of 2009.

A group led by Royal Dutch Shell, Europe’s largest oil company, signed a deal to develop Iraq’s Majnoon supergiant oilfield, pledging to spend tens of billions of dollars on the project over the next two decades.

Shell, along with Malaysia’s state-run Petronas, won the rights to Majnoon, a major prize near Iraq’s southern oil hub of Basra, in an energy auction earlier this month.

Mounir Bouaziz, a vice president of Shell Gas and Power, and Abdul-Mahdy al-Ameedi, deputy director of the Iraqi Oil Ministry’s licensing office, signed the initial agreement in downtown Baghdad yesterday. It must now be sent to the cabinet for approval. Bouaziz said the investment over the life of the 20-year deal would be “tens of billions” of dollars. “When the cabinet give agreement to the contract, and the final contract is officially signed, we will start immediately. We know the area, and we have been coming to Basra for more than a year and a half,” he said.

Shell is also awaiting final approval of a natural gas deal in southern Iraq.