Home » Energy » Chevron Defies Legal Kicks With More Divestments

Chevron Defies Legal Kicks With More Divestments

Asset hungry indigenous independent firms may find more opportunity in a cashout move by American multinational oil major, Chevron, which has offered its 40 percent stake in two more oil blocks for sale. The company’s move to sell the two joint venture strakes located in Oil Mining Leases (OMLs) 86 and 88 points at a determined bid to rid itself of all its onshore and shallow offshore in the country. Under the current arrangement which is the third phase of Chevron’s divestment programme, the company is to divest its 40 per cent interest in the assets, which are said to contain considerable resources.

OML 86 with reserves profile of 600 million barrels of oil equivalent (mmboe) hosts the Apoi and Funiwa fields which cumulatively produce some 5,000 barrels of oil per day (bopd). Other fields on the block are Funiwa 1A natural gas well, Sengana field, Buko field and Okubie field. OML 88 hosts the brownfield Pennington and Middleton fields. It also hosts the greenfield Chioma condensate field, which is as yet undeveloped. In 2014, Chevron’s net daily production in Nigeria averaged 240,000 barrels of crude oil, 236 million cubic feet of natural gas and 6,000 barrels of liquefied petroleum gas.

According to sources, Chevron is yet to reveal its advisers on the current round of divestment deals, and analysts predict that the company would try to avoid controversy in the current process to douse the reputation and sanctity of the transactions. The process is generally not helped by the large numbers of indigenous companies keen to get a piece of the IOC pie, given the few opportunities for entry with no new government licensing rounds for over a decade.

The scramble for these assets has generally led to a lucrative Chevron Defies Legal Kicks With More Divestments premium of up to 25 per cent on the value of the assets making the IOC policy of “portfolio rationalisation” to deeper waters a very profitable strategy. The offer of the two oil blocks comes in defiance of legal protests by some firms that alleged manipulation and backstage deals in previous divestments by Chevron.

Chevron appears to be quite undeterred by the problems it has had with its sales, which seem to inevitably end up in controversy. OMLs 83 and 85, which First E&P has just completed on ended up in court with international firm, Petroleos De Geneve (PDG) claiming that it won the bid for the assets. Similarly, the sale of OMLs 52, 53 and 55 remain in court even though the sale of the assets has been completed with Seplat, Amni and Belema Oil. Brittania-U however remains in court on the sale of the assets claiming to have won the bid.

Chevron in February completed the sale of its 40 percent stakes in two Nigerian shallow water offshore oil blocks, OML 83 and 85, to local firm First Exploration & Petroleum Development Company Limited (First E&P). Oil theft, pipeline vandalism and uncertainty over taxes in Nigeria’s proposed oil bill, which is still in the making, have been holding back billions of dollars in investment, leading some multinational upstream firms to sell the vulnerable onshore and shallow water assets in the country.

Last year, Oando completed the acquisition of ConocoPhillips’s upstream oil and gas business in Nigeria. The company had earlier acquired significant ConocoPhillips stake in another Agip operated deepwater block. Shell and partners in operated joint venture have also sold some 12 oil blocks about $12 billion, and the commercial success of the divestments have spurred more divestments from other multinationals.

%d bloggers like this: