China has made a proposal to buy 6 billion barrels of Nigeria's crude oil reserves and the West African country said on Wednesday it could sell stakes in its joint ventures with Western oil firms to help Beijing do so.
Minister of State for Petroleum Odein Ajumogobia said China would not be given all the reserves it was seeking but that Nigerian state oil firm NNPC could sell stakes in joint ventures with existing oil partners if Beijing offered the right price.
It's true that the Chinese have made a proposal which we are considering. They are asking for 6 billion barrels of oil from our reserves, but I can tell you that we are not going to give them all of that, Ajumogobia told reporters in Abuja.
Western oil firms including Royal Dutch Shell, Chevron and ExxonMobil, operate in Nigeria through joint ventures with NNPC. Asked if the state firm could sell its stakes to China, Ajumogobia said:
It's an option we are also looking at. Why not? If the offer is very good and very attractive why not? NNPC has the right to do whatever it likes with its own share.
Analysts say such a move would likely be challenged by Nigeria's existing partners.
Chinese state energy firm CNOOC has identified 23 licences in Nigeria in which it would like to buy stakes, according to industry sources and to a letter from President Umaru Yar'Adua's office leaked to the Financial Times on Tuesday. [ID:nLT576633]
The list includes 16 licences operated by Shell, Chevron and Exxon which originally expired last November and are currently either in litigation or up for renewal this year.
Chevron and Exxon won a year's extension, meaning their licences are due to expire this year, while Shell successfully sought a court injunction allowing it to continue to operate while it challenged the expiry, an industry executive said.
Analysts say CNOOC or other Chinese firms could bid at one of Nigeria's periodic licensing rounds for new blocks but are unlikely to be able to oust Western firms from fields already producing unless they or NNPC agree to a buyout. [ID:nLT97400]
Ajumogobia had said on Tuesday no licences would be offered to China while renewal negotiations with existing partners were ongoing.
(Additional reporting by Joe Brock in London, Randy Fabi and Felix Onuah in Abuja; Writing by Nick Tattersall; editing by James Jukwey)