Semi-public Brazilian multinational energy corporation, Petrobras has set in motion an auction to sell its interest in Nigerian oil fields, in line with the oil company’s plan to raise funds for its capital spending plan, which is expected to kick off in two months.
According to an exclusive Reuters report, the sale of the oil fields may rise to $5 billion.
The Brazilian oil giant has hired South Africa’s Standard Chartered Bank to execute the process that would commence in two months according to sources.
Asian state oil companies are expected to participate in the auction, in a bid to add more production assets to their portfolios.
However, Standard Chartered and Petrobras have declined to comment on the deal.
Headquartered in Rio de Janeiro, Petrobras, which started oil operations started in Nigeria in 1998, currently owns a stake of 8 percent in the offshore Agbami blocks, which are operated by United States energy major Chevron and a 20 percent share of the offshore Akpo project, operated by French oil firm Total.
Production of Crude Oil from the Agbami fields began in 2008. The project holds an estimated reserve of 900 million barrels per day and potential output of 250,00 barrels per day (bpd). In contrast, production in Akpo began in 2008 with plateau output set at 175,000 bpd of light condensate oil and 9 million cubic metres of gas. Probable reserves stand at 620 million barrels of condensate and more than 28 billion cubic metres of gas, according to Total.
Sale of Assets
Petrobras is on course to divest assets in order to redirect the proceeds towards higher revenue generating activities such as exploration and production to finance a five-year, $236.7-billion capital implementation plan which proves to be the world’s largest corporate investment program.
Maria das Gracias Foster Chief Executive Officer set a goal for asset sales of $9.9 billion this year, which she anticipates would provide liquidity to avert the sale of new shares, reduce debt and protect the company’s investment-grade ratings.
The plan should help Petrobras double current production by the beginning of the next decade, to about 5.2 million barrels of oil and natural gas a day. It also would accelerate Brazil to become self-sufficient in refined products and crude oil.
In its previous five-year plan, as 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 discovered potential buyers unwilling to pay top dollar for projects such as its oil leases in the Gulf of Mexico.
Divesting assets such as the Nigeria blocks would ensure that Petrobras can focus more on exploration for oil in a vast deep sea region off the coast of Brazil known as the subsalt, which reportedly contains dozens of billions of barrels of high-quality oil.