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Petrobras plans N795bn divestment from Nigerian oil blocks

Nigerian oil productionBrazilian oil major, Petroleo Brasileiro SA, Petrobras, yesterday, commenced moves to sell off its stake in some Nigerian oil blocks valued at N795 billion ($5 billion).

The sale of the oil blocks is expected to bring about an increase in the presence of Asian oil majors in Nigeria, following their interest in increasing their portfolios through the acquisition of additional production assets.

Divesting from the oil blocks in Nigeria will help the company concentrate more on exploration activities in a vast deep sea region off the coast of Brazil known as the subsalt, believed to contain dozens of billions of barrels of high quality oil.

Sources further disclosed that the divestment will help the company redirect its investment towards higher return activities such as exploration and production to finance a five-year, $236.7-billion capital spending plan.

According to sources close to the deal, the auction of the oil blocks, which will commence around May 2013, is expected to help the company raise cash and carry out its capital spending plan.

Petrobras has contracted Standard Chartered Bank to oversee the process of the sale, with oil majors in Asia said to be interested in the acquisition of the blocks.

Petrobras holds eight per cent stake in the offshore Agbami blocks, which are operated by United States energy major Chevron and a 20 per cent share of the offshore Akpo project, operated by French oil firm Total.

Crude oil production from the Agbami field fields began in 2008. Output from the project can reach 250,000 barrels per day (bpd) and it holds estimated reserves of 900 million barrels.

Akpo began production in 2009 and has plateau output of 175,000 barrels per day of light condensate oil and nine million cubic metres of gas.
It has proved and probable reserves of 620 million barrels of condensate and more than 28 billion cubic metres of gas.

Maria das Graças Foster, Chief Executive Officer, Petrobras, set a goal for asset sales of $9.9 billion this year, hoping it would free up cash, avert the sale of new shares, reduce debt and protect the company’s investment-grade ratings.

She said the plan should help Petrobras more than double current production by the start of next decade, to about 5.2 million barrels of oil and natural gas equivalent a day, and help Brazil become self-sufficient in refined products as well as crude oil.

In its previous five-year plan, announced last year, Petrobras had hoped to sell about $15 billion of assets to help finance capital spending. But as it rushed to sell assets, the company found potential buyers reluctant to pay top dollar for projects such as its oil leases in the Gulf of Mexico.

However, Standard Chartered and Petrobras declined comment.

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