Royal Dutch Shell Plc share price down, sells Nigerian assets for $5bn

Royal Dutch Shell Plc, Europe’s largest oil company, has agreed to sell several Nigerian Oil Mining Licenses (OMLs) it co-owns with Total and Eni, as civil strife and theft drive foreign companies away from Africas oldest oil industry.

The deals are not yet finalized, though the price of about $5bn was put forward by the Financial Times, citing unnamed sources, who also said the buyers are domestic oil companies.

“We have signed sales & purchase agreements for some of the Oil Mining Leases, but not all that we are seeking to divest,” Shell said, while Eni and Total have not yet commented.

The biggest divestment, worth a reported $2.6bn, is of OML 29 and includes the key oil-pipe of Nembe Creek, while the other licences, 18, 24 and 25 would cost $1.2bn, $900 million and $500 million, respectively.

Shell owns 30% of the licenses, Total 10% and Eni 5%, with the majority 55% stake remaining in the hands of the Nigerian National Petroleum Corporation.

The move was widely anticipated, and follows the trend of western oil companies divesting assets in Nigeria, as increasing losses due to theft and continuing social strife drive margins lower.

“In June 2013 we announced a strategic review of our operations in the Eastern Niger Delta, which we said could result in the divestment of some of our interests there,” Shell Petroleum said. “A process of staff engagement for those potentially impacted in the event of a successful divestment has begun and will continue over the coming months.”

Shell, in particular, has committed to a $15bn asset divestment program through 2015, half of which is complete, as executives cut lower-margin activities and minimize losses, as profits were set as priority.

Royal Dutch Shell Plc was down 0.43% to trade at 2 413 pence per share at 11:14 GMT today, for a one-year increase of 15.25% and valuing the company at €197.99bn (~$261.19bn).