UPDATE 2-Shell, Eni buy huge Nigeria offshore oil block

Wed Dec 7, 2011 12:38pm EST

* Block worth over $1 bln, holds 9 bln bbl oil reserves-sources

* Shell, Eni dismiss links with former oil min's firm

* Deal breaks new Nigeria policy to sell to local firms

By Joe Brock

ABUJA, Dec 7 (Reuters) - Royal Dutch Shell and Eni have bought the prospective Nigerian deep offshore oil block OPL 245, the companies said on Wednesday, ending a decade of legal disputes over the huge asset.

Shell and Eni said they would own the block equally but the Italian firm would be the operator. The companies did not confirm how much was paid or the size of reserves but industry experts have said OPL 245 was worth over $1 billion and holds around 9 billion barrels of oil.

The prospect sits near Total's Akpo block, which has plateau production of around 175,000 barrels of oil equivalent per day.

"The Nigerian government has awarded Agip (Eni) and ourselves OPL 245 on a 50-50 basis. Agip will operate the block," a Shell spokesman in Nigeria told Reuters. He said the deal was completed in "recent weeks".

The block was owned by local Nigerian firm Malabu Oil and Gas, which is owned by former oil minister Dan Etete. Shell has been tussling over the asset with Malabu for 10 years.

Shell and Eni told Reuters all money for the purchase of OPL 245 was paid to the Nigerian government and not to Malabu.

"We confirm that the federal government of Nigeria has allocated the deepwater offshore block OPL 245 jointly to Nigeria Agip Exploration (NAE) and Shell Nigeria E&P Company," an Eni statement said.

"By the agreement reached NAE will be the operator of the block. No agreement was entered into by NAE and Malabu Oil and Gas," the statement said. A spokesman for the Nigerian oil ministry declined to comment.

Nigeria's oil minister Diezani Alison-Madueke has publicly this year promoted local ownership of oil and gas resources in Africa's most populous nation. Shell is completing sales of several onshore licences to Nigerian firms.

Nigeria is Africa's largest oil producer and holds the world's seventh-largest natural gas reserves.

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