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UPDATE 2-Shell to sell at least 4 more Nigeria oil blocks -sources

Wed, 31st Jul 2013 14:33

* Oil majors scaling back onshore, shallow water Nigeria

* Two blocks lie in region hit by oil theft, spills

* Nigerian firms, partnered with foreign, expected to bid

By Joe Brock

ABUJA, July 31 (Reuters) - Royal Dutch Shell willsell at least four more oil blocks in Nigeria in its latestdivestment from Africa's top oil exporter, three oil industrysources familiar with the deals said on Wednesday.

The blocks are Oil Mining Licenses (OMLs) 13 and 16 onshorethe Niger Delta, and OML 71 and 72, which are in shallow water,the sources told Reuters. A Shell spokesman declined to comment.

OML 13 and 16 lie in the Ogoniland region where Shell hasexperienced long-running disputes with local communities,multiple oil spills and widespread pipeline sabotage and theft.

OML 13 covers a large geographical area and has big gasreserves, while OML 16 is a much smaller asset, sources said.OML 72 has proven oil reserves of around 120 million barrels,while OML 71 has significantly lower reserves, one source said.

Shell has been discussing renewing these licenses with theNigerian government for years but has yet to reach a deal.

The blocks are in joint ventures, with the Nigerian NationalPetroleum Corp. (NNPC) owning 55 percent, Shell 30 percent,Total 10 percent and Eni 5 percent. In allprevious deals, Total and Eni have also sold their shares.

Eni declined to comment and Total had no immediate commenton what their plans were for their stakes in the blocks.

Shell said in June that it was considering further sale ofassets in the eastern Niger Delta, where it has securityproblems - although it has never publicly connected the two.

The oil major said then that it was still committed toNigeria long term. It has already sold eight Niger Deltalicences for a total $1.8 billion since 2010.

OTHERS SELLING

Chevron is also selling five shallow water blocks,while fellow U.S. firm ConocoPhillips is selling itsNigerian businesses to Oando Energy for about $1.79billion.

Despite a scale-back by foreign firms onshore and in shallowwater in recent years, oil majors like Shell, Exxon Mobil and Chevron remain keen on expanding deep offshore,where terms are more favourable and security risks reduced.

Nigeria's "local content" policy means Shell's latest assetswill likely have to be sold to local firms, although in previousdeals smaller foreign partners usually supported the bids.

Shell is in talks with NNPC about the sales initially beforeapproaching potential buyers, two sources said.

In previous deals rows over who would take over from Shellas operator of the blocks slowed down sales because some buyersinitially thought they would run the blocks before NNPC'soperating arm NPDC took up its right to be the operator.

Potential buyers will want clarity on who will operate theblocks, what steps will be taken to tackle security issues andwho will manage Shell's infrastructure before a value can be puton each of the assets, the sources said.

Previous buyers of Shell blocks include London-listed firmsAfren and Heritage Oil, while Nigeria's Oandoalready owns a marginal field in OML 13.

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