Total developing projects as Shell sales show IOCs views diverge

International Oil Companies (IOCs) playing in the Nigerian oil and gas space are showing divergent views on the attractiveness of assets as some are moving on with developments while others divest.

Royal Dutch Shell Plc , Europe’s largest oil company, said yesterday it is advancing plans to sell four fields in Nigeria, to meet a $15 billion asset-sales plan, even as French Oil major Total told BusinessDay that it was moving ahead with projects in the country, despite the uncertainty from the late passage of the PIB.

Shell Petroleum Development Co. of Nigeria Ltd. said assets under consideration for sale are OMLs 18, 24, 25, 29 and the Nembe Creek Trunk Line, although the process has not yet concluded.

The Anglo-Dutch company and partner, Eni SpA  are close to selling the Nigerian assets for about

$5.2 billion, the Financial Times reported yesterday, citing two people familiar with the situation it didn’t identify.

However, despite the delay in the passage of the Petroleum Industry Bill (PIB) Total Upstream Nigeria said it is going ahead to embark on aggressive projects development  and exploration activities very soon, to boost oil production in the country.

According to the company it has become expedient now to increase reserve in order to up what it has  and optimise production of hydro carbon resources.

It said waiting indefinitely because of the delay in passage of the Petroleum Industry Bill (PIB) can only further complicate things, since inflation and other cost related issues would continue to impact negatively on the projects.

 Elisabeth Proust, managing director of the company, in an interview with BusinessDay, said that her company has continued to execute projects inspite of the brouhaha over the delay in the passage  of the  Bill because the terms  and conditions  governing the  projects have never changed.

She said the management of the company is very confident that  the existing productions,projects already launched, the governments and legislators globally would respect and not modify the terms already agreed to  .  “All the projects such as Ofon and OML58 are almost being completed. But for Egina we are at

midway,” Proust added. The projects, she explained have been sanctioned, based on the understanding that the agreed terms would not change.

“We need to move ahead despite issue with fiscal terms and improve upon our reserve base for the benefit of the country and company,” she said.

She said what has been delaying the execution of some of the projects have been shortage of funds. “Most times the projects are included in the budgets but when there is shortage of funds the  projects are shelved and the money is diverted towards maintenance of the  existing producing assets,” she said.

She however cautioned that unnecessary delay in project implementation could lead to increase in the cost of the projects. This she said could jeopardise the projects take-off.

In recent times, the company has commissioned projects such as Akpo, Usan, Ofon phase 11 and Amenam.

On   gas development she said that the company would achieve zero gas flare by January 2015 as the Ofon phase 11 projects that would tie all gas from other installations would have been completed

“We have one major installation where we are flaring gas, and this is Ofon, but this would stop by January 2015. The shutdown was  planned  for  December but  I want  to be  careful because even though we meant  December, it could be  extended to the second week of January 2015. Other installations are connected to the gas system and so we would have zero gas flare,” she said.

Businessday