NNPC Offers Another View on Oilfield Takeovers

Nigeria's This Day daily has just published an explanation offered by NNPC for the takeover of oilfields owned by Shell and ChevronTexaco in Nigeria, and notes that the fields are now producing about $$1.05 billion worth of oil a year at Tuesday's Nymex closing price for crude oil of $45.80.

No word yet from Chevron and Shell on how delighted they were to give the fields up.

The decision ... has started yielding fruits as NPDC has begun to improve the skills and performances of its personnel. The oil reserve level is said to have also begun to increase as well as production which currently is above 63,000 barrels per day.

At least three other countries have moved recently to take back oilfields to give to their own state-owned or indigenous oil producers, and Venezuela said this week it plans to seize an agricultural property from multinationals.

The story is at http://allafrica.com/stories/200501110376.html.

The NNPC and This Day have taken some pains to put a positive face on their seizures, which they portray as voluntary. The companies are more likely to have "volunteered" their leaseholds under political duress, none of which is indicated except, This Day notes, "The Yorla oil field situated in Ogoniland is said to have been shut-in since the past 10 years as a result of community crises."

The fields hold an estimated 100 million barrels of oil.

This Day reported:

The decision to hand over the operatorship of these oil fields to NPDC, was said to be part of efforts of the Federal Government to boost indigenous capacity development in the oil and gas industry. A recent report by NPDC explained that Chevron has already transferred the fields to the nation's exploration and production company while arrangements have been concluded for the transfer of Shell's fields as well.

But investors in the multinational giants still have reason to be concerned, as the NNPC justifies its move by noting the takeover of foreign-owned or -leased oil properties in several countries:

It would be recalled that the Federal Government, as part of efforts to position NNPC as an efficient national oil company just as its counterpart in Brazil, Norway and Malaysia, decided that it took over operatorship of some JV oil fields.

Venezuela announced Sunday they planned to take over farm properties long leased by a British agricultural firm. The lands described by Venezuelan officials as "idle" were being used to pasture a vast herd of cattle, the British firm said.

Update 4:13pm EST: Dow Jones has also updated its story with a new quote.