Anglo-Dutch supermajor Shell has idled seven rigs and taken a $56 million second-quarter charge thanks to the US ban on deep-water drilling, with a top executive refusing to rule out the possibility that Shell may seek to reclaim the cash from BP.

News wires  29 July 2010 11:07 GMT

Shell, one of the biggest oil producers in the Gulf of Mexico, said it had idled rigs rather than move them elsewhere because the six-month duration of the drilling ban meant it was not profitable to redeploy rigs to other areas.

The Hague-based company said it expected to take a further charge related to the moratorium in the third quarter, although in some cases, rig owners, such as Transocean and Noble, were bearing the lion's share of the losses.

"In some cases we have negotiated a 60% to 70% reduction in the day rates for rigs and services," Reuters quoted chief financial officer Simon Henry saying.

BP declined to say if it would be prepared to compensate Shell, although executives at the UK supermajor believe it is not liable for damages other companies suffer due to the drilling ban.

US President Barack Obama's government is in a running legal battle with oil companies to stop drilling in the Gulf of Mexico. A six-month moratorium imposed in the wake of the spill has been overturned by a U.S. court but the government is fighting to instate a new one.

Under pressure from the White House, BP has created a $20 billion fund to compensate companies and individuals affected by its oil spill in the Gulf, which was capped a fortnight ago, after spewing up to 60,000 barrels per day of oil into the sea for three months.

However, the fund is not intended to compensate those affected by the moratorium, imposed in the wake of the spill, to allow the government ensure drilling activities were safe.

BP has also created a $100 million fund to compensate oil rig workers who have lost their jobs as a result of the moratorium.

Shell added it would lose almost 3 million barrels of production this year because of the ban.

When asked if the oil spill could have happened to Shell, chief executive Peter Voser said on the company was confident in its safety measure but added: "At the end of the day, you will not be in a position to say it will never happen because accidents do happen".

Meanwhile, Nigerian media reports claim that Shell has offered to sell five oil leases in Nigeria's Niger Delta to domestic energy companies.

The THisDay newspaper, citing unidentified sources, claimed Shell is in talks with several Nigerian oil companies, including Midwestern Oil & Gas, Niger Delta Petroleum Resources, and Setplat Petroleum, for the sale of oil leases 26, 30, 34, 40 and 42 in the Niger Delta.

The leases, some of which contain reserves of up to 2 billion barrels, are valued at between $150 million and $2 billion, according to ThisDay. A deal could be completed within weeks, the newspaper said.

A Shell spokesman in Nigeria declined to comment, saying the company does not respond to speculative reports.

Shell has said it is open to selling more of its assets in Nigeria's Niger Delta, where its oil and gas production has been hit by years of militant attacks.

Any sale would need to be approved by state producer the Nigeria National Petroleum Corporation (NNPC), which is the majority shareholder of the oil blocks.

"It is premature for Shell to talk about any asset sales without consulting and getting approval from the Nigerian government and NNPC. Let the buyer beware," an NNPC spokesman said.

Nigeria has yet to approve a previous Shell sale of three Nigerian oil licenses to a consortium consisting of two local players and France's Maurel & Prom.

Shell in January agreed to sell oil mining leases 4, 38 and 41 located in the northwestern part of the Niger Delta. The leases include 30 wells with a production capacity of around 50,000 barrels of oil equivalent per day.

Published: 29 July 2010 11:07 GMT  | Last updated: 29 July 2010 11:07 GMT