Shell Mulls Stakes Sale in Two Nigeria Blocks

LONDON Nov 20, 2007 (Dow Jones Newswires)

Royal Dutch Shell PLC (RDSB) is considering selling $900 million worth of interests in Nigerian offshore blocks as it restructures and reduces its business in the troubled region, people familiar with the matter said Tuesday.

The news surfaces after Shell last week unveiled restructuring plans to cut costs and jobs at its Nigerian ventures following months of unrest and pressure by the Nigerian government to renegotiate contracts.

The Anglo-Dutch oil major is looking to divest the assets because it wants to cut the exposure of its portfolio to Nigeria, but also because the blocks are operated by another company, Eni SpA (E), a person involved in the possible deal said.

That person said the stakes could fetch $700 million to $900 million altogether. Shell declined to comment.

"The situation in Nigeria certainly isn't peaceful, but I don't think it is such as to push oil majors to leave," said Eni's Chief Executive Paolo Scaroni on the sidelines of a ceremony in Rome when asked to comment on Shell's possible exit from the blocks.

The two stakes, each of 49.8% - and owned through Shell Nigeria Exploration and Production Co. Ltd. - are in deep water blocks OML-125 and OML-134, the latter formerly known as OPL-211. Agip, a unit of Eni, owns the remaining 50.2% in each block.

OML-125 produced 12,000 barrels a day of oil net to Eni in 2006. During 2006, Agip made a new discovery of both oil and gas in a well located in the block. OML-134 is still in exploration phase.

Shell is losing 189,000 barrels a day of output from its 30% share in one of its ventures, Shell Petroleum Development Co. Ltd., after it was mothballed in the wake of attacks on facilities and staff by local rebel groups seeking a greater share of oil revenues.

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