* Delays could limit sale profits, scupper deals
* Shell, Total, Eni, ConocoPhillips also divesting
* Nigeria firms, partnered with foreign, bidding
By Joe Brock
ABUJA, Jan 13 Chevron faces delays in
closing sales of oil blocks in Nigeria worth up to $1 billion
because of legal disputes involving potential buyers, industry
sources say, highlighting a risk other oil majors could face.
Chevron is joining competitors ConocoPhillips, Royal
Dutch Shell, France's Total and Italy's Eni
in disposing of stakes in onshore and shallow water
offshore fields in the Niger Delta region.
OPEC-member Nigeria has the potential to double its 2
million-2.5 million barrel per day oil output in the next five
years but problems with oil theft, pipeline sabotage and
regulatory uncertainty are putting off investment.
Oil majors want to keep hold of the biggest producing
fields, offshore assets and key pipelines and export terminals.
But they are disposing of less profitable onshore blocks and
fields that the government could strip from them if they remain
undeveloped for ten years, notably in the restive Niger Delta.
Chevron has chosen its preferred bidders for the five blocks
it put up for sale in June but the deals have not closed because
rival firms have disputed its decision, with one taking the U.S.
company to court, sources close to the deals said.
A Chevron spokeswoman said the company did not comment on
Nigerian firm Brittania-U, run by former Chevron executive
Catherine Uju Ifejika, was the highest bidder at over $1 billion
for the biggest cluster of blocks - OML 52, 53 and 55 - and
Chevron began discussions with the company over the sale, two
banking sources close to the deal said.
Chevron decided to look at alternative bids after
Brittania-U did not show sufficient evidence it could muster the
amount promptly, banking and oil industry sources said.
Brittania-U did not respond to requests for comment.
Chevron then agreed to sell the biggest block, OML 53, to
Seplat, which is partly owned by French oil explorer Maurel &
Prom and Swiss-based commodity trader Mercuria, while
OML 52 would go to local firm Amni Petroleum and the smallest,
OML 55, to Belema Oil, run by a local Delta community.
None of the companies responded to request for comment.
A Nigerian federal high court issued an interim injunction
in December stopping Chevron from selling the blocks to Seplat
and others after Brittania-U brought action against the U.S.
major saying it had already agreed a deal to buy the assets,
court documents showed.
Chevron could earn between $700 million and $900 million for
the three blocks, two sources involved in bids said.
The three blocks had proven reserves of 555 million barrels
of oil equivalent, with the biggest block OML 53 holding 310
million of those reserves, two oil industry sources said, citing
a Chevron memorandum given to bidders.
Court cases can drag on for years in Nigeria and the longer
the delay the less profit oil majors are likely to make from the
deals and the greater the chances the sales could fall through
Such litigation also slows down the potential oil and gas
production increases that could be felt from new buyers
exploiting assets left undeveloped by oil majors.
ConocoPhillips has waited for more than a year to close a
$1.6 billion deal with Nigeria's biggest energy company, Oando
, for its business in Africa's biggest oil
producer because the local firm has taken more than a year to
Oando plans to raise $193 million in a share issue to help
finance the deal, banking sources said in December, and the
company has said the acquisition will be completed early this
Chevron has also agreed to sell two smaller blocks - OML 83
and 85 - to Nigerian firm First Exploration and Production with
a bid of around $100 million but the deal has not been completed
and rival bidders are also considering disputing this deal, the
two banking sources said. They did not give details of which
companies might challenge the sale.
First E&P's Chairman Henry Odein Ajumogobia is a former
foreign affairs minister and its Managing Director Ademola
Adeyemi-Bero spent five year working at BG Group.
Chevron and First E&P declined to comment.
Shell, Total and Eni are selling a combined 45 percent stake
in at least four more oil blocks with combined production of
around 70,000 barrels per day. Bids on these blocks are due next
month, sources said.
Shell, the biggest producer in Nigeria, has sold eight oil
blocks in the Niger Delta for a total $1.8 billion since 2010
and some industry sources believe the Anglo-Dutch major may have
the experience needed to get deals agreed.
"It's not about the highest bid, it's about which buyer has
the know-how and the connections to get the deals done," one
executive at a Nigerian company said.