Afren announces purchase of Nigerian oil block

1 December 2011, Sweetcrude, Lagos – First Hydrocarbon Nigeria (FHN), partly owned by UK firm, Afren, confirmed on Thursday the purchase of a 45 percent stake in Nigerian oil block OML 26 for $147.5 million from Shell, Total and Eni, acording to Reuters.

Afren controls a 45 percent stake in FHN, which it set up with First City Monument Bank (FCMB) and Guaranty Trust Bank.

FHN, which is focused on purchasing local energy assets, said OML 26 was producing 6,000 barrels of oil per day and this would increase to 40,000 bpd within four years.

It plans to operate the block with the producing arm of state-run Nigerian National Petroleum Corporation (NNPC), which owns the other 55 percent and wants more indigenous companies to own the oil in Africa’s most populous nation.

“This acquisition is a strong endorsement to Afren’s long-term strategy of working with indigenous companies to reactivate fallow assets held by the major international oil companies in Nigeria,” said Osman Shahenshah, Afren chief executive officer.

The block, which sits on the vast Niger Delta wetlands region, has certified recoverable reserves and contingent resources of 184 million barrels (mmbbls) at producing fields, and an estimated 144 (mmbbls) at undeveloped fields with gross prospective resources estimated at 615 mmbbls, FHN said.

The company borrowed $280 million from Nigerian banks, FCMB and Stanbic IBTC, for acquisition and development of the block.

“The support demonstrated by our Nigerian financing partners is a clear endorsement of the growing indigenous Exploration and Production industry in Nigeria,” said Constantine ‘Labi Ogunbiyi, FHN chief executive officer.

“Together with NPDC, we will seek to aggressively grow reserves, increase indigenous production and importantly, support the expansion of the local services industry.”

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