Shell’s decision to divest from some of its onshore oil assets in Nigeria’s Niger Delta signals a shift in its focus for Africa’s largest oil producer, but it does not mean the oil conglomerate is about to leave the region.

The company since 2010 has sold eight of its licenses in the volatile oil-rich Niger Delta, and the company stated in June 2013 that it was considering the sale of at least four other oil blocks in eastern Niger Delta. The blocks are oil mining licenses (OMLs) 13 and 16 onshore and OML 71 and 72, which are in shallow water.

OML 72 is reported to have proven oil reserves of more than 100 MMbbl, while OML 71 has fewer reserves. OML 13, which has a large amount of gas reserves, is in the Ogoniland area of the Niger Delta, where Shell has been prohibited since 1993 from operating by indigenes of the area. The blocks are in joint ventures, with the Nigerian National Petroleum Corp. (NNPC), which own 55%, with Shell’s share at 30%; Total, 10%; and Eni, 5%.

Shell has, however, experienced pipeline sabotage, several oil spills, and violent disagreements with local communities in Ogoniland. So it is understandable why Shell wants to divest from these oil blocks.

The company said earlier in August 2013 that it was carrying out “a strategic portfolio review” that could lead to selling leases in the eastern Niger Delta. Shell’s outgoing CEO Peter Voser said that while the company would reduce its presence in some parts of the Niger Delta, particularly the east where sabotage is of great concern to the company, it will still invest in others and will not leave onshore operations.

Although Shell is scaling back its onshore and shallow-water operations, it still has interests in deepwater assets. Shell operates the Bonga deepwater oil project, Nigeria’s first deepwater project, which has capacity to produce 200,000 b/d.

It also has Gbaran-Ubie onshore project as well as Bonga North, Northwest, and Bonga Southwest/Aparo in deep water. The fields could give Shell more than 250,000 b/d of oil.

Shell, the largest oil producer in Nigeria, began commercial oil export from Nigeria in 1958. The Shell Petroleum Development Co. (SPDC), a Nigerian Shell subsidiary, has operations in shallow water and onshore the Niger Delta covering about 20,000 sq km (7,722 sq miles). Operations include a network of a little more than 6,000 km (3,728 miles) of flow lines and pipelines, about 60 producing oil wells, approximately 700 producing wells, 60 flow stations, seven gas plants, and two major oil export terminals at Bonny and Forcados.

Shell also is a key shareholder in Nigeria’s only LNG plant on Bonny Island. The plant, which started production in 1999, has an overall capacity of 22 million tons a year of LNG.

And the company continues to invest in the area, announcing in June 2013 that it would spend $3.9 billion on a series of five gas supply and infrastructure projects and a reconstruction of a better protected Trans Niger Pipeline (TNP), a crude oil route that has been regularly targeted by oil thieves. The TNP, a 150,000 b/d pipeline, has been shut down a number of times since 2012 as a result of crude oil theft related leaks.

In addition, Shell has notified the Nigerian government that it is planning to buy some of Chevron’s Nigeria oil licenses.

Oil industry sources in Lagos said Shell may be divesting from some of its onshore oil fields because they are prone to vandalism and oil thefts, but the Chevron oil fields are better secured.

Also, Shell and Eni said they bought a big offshore oil block OPL 245 from the Nigerian government for $1.3 billion in 2011. The oil block according to oil experts contains up to 9.23 Bbbl of crude oil.

The company explained that in 2012 Shell-operated ventures in Nigeria produced an average of 949,000 b/d. The same year Shell-run companies awarded contracts worth almost $2.4 billion to Nigerian companies, representing 64% of the total number of contracts awarded that year.

Shell, however, lost $250 million in 2Q 2013 due to oil theft and other operational challenges in Nigeria, according to Voser.

The company stated in April 2013 that thieves drain an estimated 60,000 b/d from its local joint venture. It added that volumes of oil stolen from Shell and other oil companies in Nigeria have reached a total of 150,000 b/d.

The International Energy Agency said Nigeria was losing about $7 billion annually to oil theft.

“[The] massive and growing problem of oil theft and illegal refining in the Niger Delta has reached unprecedented levels,” Mutiu Sunmonu, head of Shell Nigeria, said in a letter published on Shell’s website. He added the size of the problem indicated “a well-financed and highly organized criminal enterprise that uses influence, corruption and violence to protect its interests.”

However, considering its abundant assets with plans for more investment, it is doubtful the company will leave Nigeria’s onshore areas. “It instead sees sense in working onshore in Nigeria,” said an oil expert in Lagos. He said he believes the reasons for Shell’s shift from onshore and shallow fields in the Niger Delta are oil theft, pipeline sabotage, militant’s unrest, kidnapping, and its big budgets on security in the region.