The Nigerian National Petroleum Corporation (NNPC) and a local company, ND Western, have an onshore oil block operated Shell Petroleum Development Company of Nigeria Limited (SPDC). The OML 34 is amongst three onshore blocks that the SPDC has been trying to divest this year as part of a rejig of its portfolio in Nigeria.
NNPC, in a statement, said it would run the oil block with ND Western will now run the oil block, saying it was “a major milestone in the oil and gas sector.”
The corporation said: “The taking over of Oil Mining Lease (OML) 34 by the Nigerian National Petroleum Corporation and ND Western (is) part of measures to grow the in-country upstream capacity of the petroleum industry.”
NNPC takes 55 per cent and ND Western 45 per cent of the block from Shell Petroleum Development Corporation, a Shell-run joint between NNPC, with 55 per cent; Shell, with 30 per cent; EPNL, with 10 per cent; and Agip, with five per cent.
Shell has been winding down some of its onshore operations to focus on offshore and deepwater drilling. The sales follow similar divestments over the past two years. The company said last month it was seeking buyers for OMLs 30, 34 and 40.
Shell's onshore facilities are plagued with problems such as militancy and rampant oil theft, although the firm says such problems have not influenced its divestment plans.
Last year Shell sold its 30 percent stake in Nigerian onshore oil block OML 42 to local consortium Neconde Energy - which includes Nestoil Group, Aries E&P Company Limited, VP Global and Poland's Kulczyk Oil Ventures - for $390 million.
In the same year, it divested its 30 percent stake in block OML 26 to First Hydrocarbon Nigeria (FHN), which is part-owned by Afren, for $98 million.
The statement said the sale of the block "would give indigenous companies the impetus to become an active player in the oil and gas sector."