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Shell Open To Nigeria Asset Sales, Output Hit

Source: Reuters 2/4/2010, Location: Africa

Royal Dutch Shell Plc said that it was open to selling more assets in Nigeria, where its oil and gas production has again been hit following recent attacks on pipelines.

"The onshore SPDC production, remember this is Shell's 30 percent share, is 175,000 bpd in Q4 last year, down about 150,000 bpd today due primarily to attacks in the last few days on flowlines," Shell Chief Financial Officer Simon Henry said after the company announced fourth-quarter results.

Shell said on Sunday it had shut down three pumping stations in Nigeria's Niger Delta following sabotage on a key crude pipeline. It did not say then how much output had been affected.

Traders said the attack had stopped production from the Forcados stream, which they said averaged around 150,000 bpd of production in 2009.

Attacks by militant groups on Nigeria's oil sector has prevented the country from producing two-thirds of its 3 million bpd of capacity, costing it about $1 billion a month in lost revenues.

Asset Sale
Shell Chief Executive Peter Voser said on Thursday the company may sell more of its Nigerian assets.

"Nigeria is part of our total portfolio and if values are right we will always look at them and see if potential asset sales can actually give us more value than operating them ourselves," he said.

The company said on Friday it had agreed to sell its stake in three onshore oil licences in Nigeria to a consortium consisting of two local firms and France's Maurel & Prom.

Analysts said Shell was likely to sell onshore fields where there have been problems or those not yet producing oil, but this would not deter interest from potential buyers.

"Shell are looking at sales of smaller producing fields, those where security issues have shut in production and undeveloped blocks," said Holly Pattenden, head of oil and gas research at Business Monitor International.

"National companies from China and some Indian companies want to move in with the resources of the state behind them and we're also seeing a rise of African exploration companies," Pattenden added.

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