FG Considers Options on Divestment Plan by Shell

The federal government is weighing some options as discussions with Anglo-Dutch oil company, Shell Petroleum Development Company, begin over its plan for total divestment from onshore operations in Nigeria.

The Minister of State, Petroleum Resources, Chief Timipre Sylva, yesterday in Abuja listed three possible options being considered as comprising a takeover of the company’s stake in the oil and gas industry by the Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC); acquisition by indigenous operators and involving a mixture of local players and other foreign independent operators in the process.
 The Anglo-Dutch energy giant has been gradually selling its onshore assets for over a decade in Nigeria.

Shell, operator of Nigeria’s onshore oil and gas joint venture (JV) SPDC, had recently indicated it would no longer continue to be exposed to the risk of theft and sabotage.
 The company’s Chief Executive Officer, Mr. Ben van Beurden, however, said yesterday that its onshore operations in the Nigerian oil and gas industry were no longer compatible with its long-term climate strategy.

He also told investors that the additional community issues in the Niger Delta were becoming a huge challenge for the company.

However, Sylva who fielded questions from journalists on the issue stated that while the federal government is in consultations with the oil giant on the divestment move.

“Some actually feel that Shell should not hurriedly divest and to at least stay,” he said, adding: “Where Shell has completely divested from a sector is not good for us.”

The minister added that the executive arm is discussing with the National Assembly on the quick passage of the long-awaited Petroleum Industry Bill (PIB), saying that the bill will be passed lastest next month.

Sylva said: “I want to tell you that PIB is fully on course and we are very happy because we have focused on that for a long time and we had many meetings with the National assembly and stakeholders.

“Today, I believe that we are all basically satisfied with where we are. The National Assembly has given a timeline. They actually gave April but a few things happened. But give or take, I still believe that the passage of the PIB will not go beyond June.

“We are hopeful that between now and June, they will pass the PIB. I don’t think we are far away with the passage of the PIB.”

He stated that the nation’s future lies in its vast gas reserves, which have been abandoned for decades, adding that the development of the huge gas potential will fast-track the diversification agenda.”

He added: “Unfortunately, what should have helped us are the laws around the oil industry and this has not happened over the last 20 years we have been tinkering with the laws. And yet, this law will power a lot of progress in this industry because the problem we have in the gas sector in Nigeria is that there are no clear fiscal regimes in the legal framework.”

According to him, harnessing the country’s gas reserves which currently stands at 203 trillion TCF, will not only create jobs but also open more linkages with other sectors of the economy.

Sylva stated that the 203 trillion proven gas reserves were discovered in the course of oil exploration, adding that a conscious exploration could yield as much as 600 trillion tcf.

He said: “People have become more aware of the need for us to move towards gas. Last year, one of the first things we were able to achieve was the NLG Train7 final investment decision (FID) that has eluded the country for a long time.”

According to him, with the development of Nigeria’s gas reserves, over $16.1billion has so far come into the country as Foreign Direct Investment (FDI).

He added that the Nigeria Gas Commercialisation programme is fully on course, while the autogas policy is being finetuned in collaboration with the Central Bank of Nigeria (CBN), which is to bring in conversion kits and make soft loans available for marketers to fit their filling stations.

For the policy to work effectively, he said there must be enough vehicles and filling stations.

On the recent judgement against Nigeria by a Milan court on the Malabu oil deal, the minister stated that the decision on the next move would depend on legal advice from the Attorney-General of the Federation and Minister of Justice, Mr. Abubakar Malami.

The minister also said the $1.5 billion required for the proposed rehabilitation of the Port Harcourt Refinery had been secured, adding that putting the refineries in shape was necessary before considering what options are better to run them, including using operations and management (O&M) experts.

Source:ThisDay Ng