Chevron to sell three oil blocks

SPECULATIONS are rife that Chevron Corporation would receive bids on September 30 from prospective buyers of three oil blocks in the Niger Delta, with several indigenous firms in the race.
Chevron’s move will be one of the major asset disposals by International Oil Companies (IOCs) under guise of promoting local participation in the country.
Oil industry sources estimated the mean value of the three blocks combined at $500 million to $600 million and anticipate winning bids will be around those levels.
Chevron had said in June that it would be selling its 40 per cent interest in five onshore blocks, joining Royal Dutch Shell, Italy’s Eni and France’s Total (TOTF.PA) in selling stakes in Niger Delta assets.
U.S. firm ConocoPhillips is also selling its Nigerian assets to Oando Energy for $1.79 billion.
Sources said that Chevron planned to sell Oil Mining Lease (OML) 52, 53 and 55 to one buyer and suitors would have to pay 15 per cent of bids on September 30, three sources close to the deals told Reuters.
The firm will sell two other blocks, OML 82 and OML 85, in a separate bidding process. The U.S. firm did not respond to a request for comment.
The three blocks have total oil reserves of around 134 million barrels and five trillion cubic feet of gas, two sources said. One company was willing to bid $1.7 billion for the assets but it was unlikely it was a credible buyer, the sources said.
Consortium bidders were more likely to be able to raise the financing necessary, sources said and as with recent sales of Shell oil blocks, Nigerian firms, many in partnership with foreign companies, are likely to win most bids.
Nigeria’s South Atlantic Petroleum (SAPETRO), which already has joint ventures with Total and China’s CNOOC, is expected to bid, as is First Hydrocarbon Nigeria, the local-arm of London-listed Afren, two sources involved in the deals said.
Afren declined to comment and SAPETRO did not respond to a request for comment.
Since 2010 Nigeria has had a policy of encouraging more direct ownership of its oil and gas by Nigerians, either through the state oil company or local private firms. That has raised concerns among foreign oil majors they may lose smaller assets if they do not sell now, industry experts say.
Worries over oil theft, fraught relations with communities living around oil fields and uncertainty over a stalled bill to overhaul fiscal terms has also encouraged majors to sell down.
Many Nigerian firms are backed by powerful political or business figures. The chairman of SAPETRO is General T.Y. Danjuma, a former minister of defense and chief of army staff.
SEPLAT, which is partly owned by French oil explorer Maurel & Prom and Swiss-based commodity trader Mercuria, is expected to submit a bid, the sources said. SEPLAT did not respond to request for comment.
Indigenous Nigerian companies who already manage marginal fields in the delta, including Brittania-U, Vertex, Sogenal and Seven Energy have shown interest in the blocks, they said.
Chevron owns a 40 per cent stake in 13 onshore blocks with Nigeria’s state oil firm NNPC and also has deep offshore assets. Its 2012 net daily production in Nigeria averaged 238,000 barrels of crude oil and 165 million cubic feet of natural gas.
The Nigerian National Petroleum Corporation (NNPC), which owns the remaining 60 per cent of the blocks Chevron is selling, has warned prospective buyers that although the U.S. firm currently operated production of the blocks, it had the right to hand over the handling of drilling to its subsidiary NPDC.
Not having operatorship poses significant risks for would be investors in the fields, not least that NPDC is short on finance and expertise. It has usually had to call in a third-party to operate the blocks, pushing up costs.