Shell scaling down operations in Nigeria
Royal Dutch Shell (NYSE:RDS.A) is considering further reduction of its oil production in Nigeria, where a plethora of oil spill and thefts have tarnished the reputation of the company and the region's environment.
Nigeria would like to see either its state oil company or local firms own more of its oil and gas. According to Reuters, major foreign oil companies fear losing smaller assets if they don't sell them off now.
Shell's Nigerian subsidiary announced it will review over 28 leases that produce more than 750,000 barrels a day with international and Nigerian partners, in order to decide the future of them. Shell has already sold eight Niger Delta licenses. Meanwhile, rival Chevron (NYSE:CVX) announced earlier this week that it sold five Nigerian shallow-water oil blocks.
However, Shell's review of its 28 leases came with an announcement that it would go ahead with two other oil investments in the west-African country, the Trans-Niger Pipeline loop-line (TNPL) and Phase Two of the Gbaran-Ubie gas project. The two projects will run the company approximately $2.9 billion. The TNPL investment is aimed at better protecting it from theft. As recently as last week Shell shut the TNPL down after what it called a 'crude oil theft' caused an explosion and fire.
In a strange turn of events, French company Total (NYSE:TOT) announced it is developing a new offshore oil field it hopes can produce 200,000 barrels a day in Nigeria. According to Fox News, the company will partner up with the national oil companies of Nigeria, Brazil, and China on the oil field and hopes production can start by 2017.
There are clearly differing viewpoints on the safety of oil investments in Nigeria, leaving uncertainty as to how oil investments will play out over the coming months and years (Wall Street CheatSheet).