2nd UPDATE:Shell Sells 3 Nigeria Oil Blocks To Local Companies

By James Herron
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--The Nigerian joint venture company operated by Royal Dutch Shell PLC (RDSB.LN) agreed Friday to sell its 30% interest in three oil production licenses that have been shut down since 2008 to a consortium led by local companies for an undisclosed sum, the venture said in a statement.

The deal shows how Shell is shifting its focus away from its troubled Nigerian heartland, although the company says it remains committed to the country and the asset sale is smaller than some industry observers expected.

The area includes about 30 wells with a production capacity of about 50,000 barrels of oil equivalent a day of oil and gas, the statement said. "Production is currently shut down awaiting completion of repairs to an export pipeline damaged in late 2008," it said.

A Shell spokesman wasn't able confirm the cause of the damage on the pipeline, although damage to infrastructure in the region from oil theft and militant attacks is common.

The buyer is a consortium comprised of Nigerian companies Platform Petroleum Limited and Shebah Petroleum Development Company Ltd. and France's Maurel & Prom.

"This transaction should be seen in the context of Shell's active portfolio management of its assets and interests across the world," said Mutiu Sunmonu, Managing Director of the Shell venture. "We have been in Nigeria for more than 50 years and remain committed to doing business here."

The licenses cover an area of 2,650 square kilometers in the northwestern Niger Delta and are held by Shell Petroleum Development Company of Nigeria Ltd., which is a joint venture between the Nigerian National Petroleum Company, Shell, Total SA (TOT) and Eni SpA (E).

The deal is subject to the approval of the Nigerian government and national oil company.

Shell has recently shifted focus away from its troubled Nigerian operations. Chief Executive Peter Voser said this month that he no longer expects the country, which has been one of Shell's heartlands for decades, to drive output growth for the company.

Violence, kidnapping and sabotage attacks on infrastructure in Nigeria's oil-producing areas have hampered Shell's operations for years. Despite a recent amnesty and a continuing truce between government forces and Niger Delta militants, violence persists.

A decision by a Dutch civil court last month also opened Shell up to potentially costly lawsuits related to oil spills in Nigeria.

Voser said in October that Shell's Nigerian oil output was down to 120,000 barrels per day from 300,000 barrels a day before the violence started.

Last month, a person familiar with the matter told the Wall Street Journal that Shell is seeking buyers for 10 of its Nigerian onshore oil producing assets worth between $4 billion and $5 billion in total. China National Petroleum Corp. has been reported as a possible buyer.

However, Shell is expected to renew the leases on its most significant oil producing areas in Nigeria soon, a senior government official told Dow Jones Newswires Wednesday.

Company Web site: http://www.shell.com

-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; james.herron@dowjones.com