Shell acquires Nigerian oil block

Jan 13, 2004 01:00 AM

Shell Nigeria Petroleum Exploration Company (SNEPCO) has paid $ 210 mm signature bonus to the Federal Government, to finally acquire deep offshore block OPL 245. Another multinational oil firm, Elf Petroleum Nigeria, has concluded plans to expand production from one of its oil fields located offshore Rivers State, and the project is expected to gulp $ 500 mm.
SNEPCO is a wholly owned subsidiary of Shell Petroleum Development Company (SPDC), with the sole responsibility of exploring and producing hydrocarbons in Nigeria's deep waters. The cheque for the payment of the signature bonus on the block, was received by the Minister of State for Finance, Mrs Esther Usman. The payment would end several months of controversy over the ownership of OPL 245.

Ownership of the oil block had been hotly contested by an indigenous company, Malabu Oil and Gas, which claimed that the block was first awarded to it by the then military government of General Abdusalami Abubakar. Malabu, a company in which former oil minister Chief Dan Etete has substantial interest, instituted a $ 1 bn claims against the Federal Government and Shell in a New York court.
The company also petitioned the House of Representatives in August 2002, seeking for the revalidation of the license. Shell responded by filing a suit at the Federal High Court, Abuja, to stop the hearing at the House. In the course of the legal tussle, the International Criminal Police Organisation (Interpol) last year, declared Etete wanted in what was then linked with a case of money laundering.

OPL 245 was one of the numerous oil blocks awarded during the immediate past military regime but revoked by President Olusegun Obasanjo on the recommendation of the Christopher Kolade Panel. The Federal Government said the block was undervalued when it was awarded to Malabu. It said the company did not even meet up with the payment of $ 20 mm price offered then. Government officials maintained that the oil block was re-awarded to Shell after a competitive bidding process.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Engineer Funso Kupolokun, said "OPL 245 went through open tendering and competitive process."
"SNEPCO won the block through this process being the highest bidder. The $ 210 mm is the highest paid in the history of acreage allocation in Nigeria," Kupolokun said.

A Shell spokesman who also confirmed the payment of $ 210 mm cheque by SNEPCO's Executive Director, Dr Kisito Okpere, told that as far as the company was concerned, it acquired the block legally. "We have an official letter awarding the block to us," he said.
Senior officials of the Ministry of Petroleum Resources said the block holds good prospects of bigger oil reserves and that it might be key to meeting Federal Government's target of raising the country's reserves to 40 bn barrels by 2010. Official figures put the nation's oil reserve currently at 34 bn barrels.
"To achieve the reserves target by 2010, we need to invest and discover 13 or 14 world class fields like Bonga," said a Ministry official. Bonga, also owned by Shell, holds an estimated oil reserves of 1.2 bn barrels.

Meanwhile, French oil firm, Elf Petroleum Nigeria, is embarking on a major new development in its Ofon offshore oil field, located in Oil Mining Lease (OML) 102. Company officials said the project was the second phase of development plans for the field, which began production in 1998 and has hit production peak at about 60,000 bpd.
According to pre-qualification documents on the engineering contracts just released by the company, the second phase of Ofon project will involve construction of four platforms and a sizeable gas export pipeline, with total capital expenditure of $ 500 mm. Crude oil produced from the field will be handled at Elf's new floating, production and storage (FSO) facility installed last July, while the gas will be transported via a 60 km pipeline that will feed the Nigeria LNG Bonny plant.

Source: This Day
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