Shell Vows to Fight off Chinese over Nigeria’s Oil
•Amnesty: Production on the rise in Bayelsa,
By Ejiofor Alike in Lagos and Segun James in Yenegoa with agency report, 10.30.2009

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Royal Dutch Shell Plc has said that it will fight any possible efforts by the Federal Government to hand over the control of its Nigerian oil fields to Chinese oil companies.


This is coming as the Europe’s largest oil company by market value said its restructuring programme was yielding results with operating costs reduced by $1 billion in the first nine months of 2009 and with around 5000 jobs cut.
The oil major also said that its crude oil output in Bayelsa State had increased from 12,000 barrels per day at the height of militancy in the Niger Delta to 100,000 barrels per day in the last few weeks.


According to a Reuters report, when asked about recent Chinese approaches to the Nigerian government, newly-appointed Chief Financial Officer of Shell, Mr. Simon Henry, told analysts yesterday on a conference call that the oil major would resist the Chinese move.


“One thing you probably will have seen, and can be sure of, is that both ourselves and the industry will defend our interests,” Henry told the analysts.

China has indicated its desire to move in on oil blocks currently licensed to Shell, Chevron and ExxonMobil, offering about $30 billion for 49 per cent in 23 oil blocks – 18 onshore and five offshore.


Henry noted the speculation came against a background of Nigeria proposing an oil reform bill.
The proposed Petroleum Industry Bill (PIB) “could allow the government to renegotiate old contracts, impose higher costs on oil companies and retake acreage that firms have yet to explore,” he said.


THISDAY had reported that the China National Offshore Oil Company (CNOOC) had made a proposal to buy six billion barrels of Nigeria's crude oil reserves and the Federal Government said it could sell stakes in its joint ventures with the International Oil Companies (IOCs) to help the Chinese do so.


Minister of State for Petroleum, Mr. Odein Ajumogobia, who had confirmed this development, however pointed out that China would not be given all the reserves it was seeking.


He, however, stated that the Nigerian National Petroleum Corporation (NNPC) could sell stakes in joint ventures with existing oil partners if the Chinese offered the right price.


He said: “It's true that the Chinese have made a proposal which we are considering. They are asking for 6 billion barrels of oil from our reserves, but I can tell you that we are not going to give them all of that.”
Western oil firms including Royal Dutch Shell, Chevron and ExxonMobil, operate in Nigeria through joint ventures with NNPC.

Asked if the NNPC could sell its stakes to China, Ajumogobia had said: “It's an option we are also looking at. Why not? If the offer is very good, and very attractive. Why not? NNPC has the right to do whatever it likes with its own share.”


Ajumogobia had earlier said that the Federal Government was in talks with the Chinese company.
“We are talking to them about their quest to buy proven reserves. This is not new, this predates this administration,” he said, adding: “We are not offering leases that are up for renewal in the middle of negotiations to renew. That is not happening.”


Ajumogobia said the Chinese had identified a number of blocks in which they would be interested, including licences operated by Royal Dutch Shell, Chevron and ExxonMobil which originally expired in November and December 2008.
Chevron and Exxon won a year’s extension, meaning their licences are due to expire this year, while Shell successfully sought a court injunction allowing it to continue to operate while it challenged the expiry, an industry executive said.


Analysts had expressed the feelings that if the Chinese bid is successful, it could place the company in competition with major western groups including Total, Shell, Chevron and ExxonMobil, which operate the 23 blocks under discussion.


The 23 oil mining leases identified as targets by CNOOC included Shell's Bonga field, ExxonMobil-operated Erha and Chevron's Agbami.
The Bonga licence will expire by 2023, while Agbami expires in 2024.


“We have not invited anyone to discuss the possibility of leasing these proven reserves. The Chinese made an offer and said they had identified certain blocks including some already being exploited by some of our partners,” Ajumogobia added.


The Financial Times also reported that CNOOC was bidding for six billion barrels of Nigeria’s oil in a deal worth about $30 billion.
Meanwhile, Shell has also said its third quarter net profits fell 73 per cent, after being hit by falling oil and gas prices and refining margins, while Chief Executive Officer, Mr. Peter Voser, has warned of a slow recovery.
“We see some indications that energy demand and pricing are improving, but the outlook remains very uncertain, and we are not expecting a quick recovery,” Voser said in a statement.


Voser said his restructuring programme was yielding results with operating costs lowered by $1 billion in the first nine months of 2009 and around 5000 jobs cut.
In a related development, Shell Petroleum Development Company (SPDC) has announced an increase in the Bayelsa State production figure since the end of militancy in the Niger Delta.
Managing Director of SPDC, Mr. Mutiu Sunmonu revealed this to the State Executive Council (SEC) when he paid a working visit to the state.


According to him, oil production in the state had increased from a paltry 12,000 barrels per day at the height of militancy in the region to 100,000 barrels per day in the last few weeks.
Sunmonu also predicted that within the next few months, the figure was expected to increase to about 150,000 barrels per day.


He stressed that all other things being equal, before the end of 2010, the state might hit its former height of 250,000 barrels per day.

Speaking on the visit of the SPDC management, the state Commissioner for Information, Orientation and Strategy, Chief Asara A. Asara, said though they were happy about the development, the governor, Timi Sylva, is intensifying efforts on some aspects of the PIB in order to ensure it is more beneficial to the people.


The state’s production figure had nosedived at the height of the militant activities, moving the state from being the second largest oil-producing state to the sixth position.


http://www.thisdayonline.com/nview.php?id=158467

The fear of the chinese is the beginning of ------.

Good move from the FG.
Now the so-called majors will sit up.