Conoil in advanced talks for Chevron’s shares in 2 Nigerian offshore blocks

Nigeria’s indigenous oil firm, Conoil is in advanced discussion to purchase 40 percent equity held by US oil major Chevron Corp. in shallow-water Oil Mining Lease (OML) 86 and OML 88.

Both fields contain 55 million barrels of yet-to-be exploited (2P) oil barrels and 2.8 trillion cubic feet of undeveloped gas reserves.

Africa Oil & Gas Report, an energy intelligence publication by a respected analyst, Toyin Akinosho, said Conoil is currently in discussion with the California-headquartered major, although it wasn’t clear, as of the time of this writing, how much the Lagos-based firm is betting on the assets which lie in contiguity with some of its own producing properties.

To run the sale process, Chevron has hired one of Canada’s big five banks and third-largest Canadian bank by deposits and market capitalisation, Scotiabank.

This is not the first time Chevron will try to sell some of its Nigerian oil blocks. In 2015, it had attempted to sell these same blocks to local company First Exploration & Petroleum Development Company Limited, which was, however, unsuccessful.

Technically, selling the blocks will put further strain on the turbulent 116-year-old relationship between the company and Nigeria, a partnership older than the British amalgamation of Nigeria itself.

The sale is part of a broader retreat by international oil companies from Nigerian oil and gas fields that have been plagued by pipeline theft as well as uncertainty over tax regime.

Foreign oil companies including Chevron, Royal Dutch Shell and Exxon Mobil have retreated in recent years from onshore and shallow-water production in Nigeria due to oil theft, selling assets mostly to local companies.