Chevron's Nigeria oil block sales delayed by legal challenges

January 14, 2014

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, Reuters reported on January 13.

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.

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.

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.

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.

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.

Copyright: Reuters, 2014