Financial Energy Review
Two Nigerian oil companies – Heirs Oil and Gas Limited and ND Western Limited have submitted bids Shell Petroleum Development Company’s (SPDC) oil fields in the Niger Delta, Nigeria
According to Bloomberg, Shell Plc is set to receive two final offers this week for its onshore oil and gas fields in Nigeria. Bloomberg quoted people with knowledge of the deal.
It said two Nigerian local companies Heirs Oil and Gas Limited and ND Western Limited are competing to buy Shell’s 30 per cent interest in the joint venture between the Nigerian National Petroleum Company Limited (NNPC) and SPDC. SPDC operates the oil assets in the Niger Delta, which are nearby offshore areas.
Quoting people who are in the know of the transaction but asked not to be identified because the information is private, Bloomberg said bids are due June 10.
Energy consultant Wood Mackenzie Limited in a report last year valued Shell’s stake at $2.3 billion, assuming a long-term oil price of $50 a barrel. But with Brent now trading at about $121 a barrel, the stake likely is worth significantly more.
In the report, Wood Mackenzie said the joint venture’s assets offered “considerable value upside,” but warned potential buyers to “do their homework,” given the business’ lack of investment, issues with crude theft and insecurity and gas market constraints in Nigeria.
Shell, Heirs and ND Western, Bloomberg said, declined to comment.
Shell announced its intention last year to sell the stake, saying its long-term energy transition strategy was incompatible with Nigerian operations prone to spills and theft. Chief Executive Officer Ben van Beurden told shareholders in May that a significant increase in sabotage in recent years had resulted in a state of near-lawlessness that the company couldn’t control.
“In the end, we have to concede that this is beyond what we can do,” he said.
Potential future costs related to litigation and environmental liabilities likely would affect the stake’s valuation, two of the people said.
Two other local companies – Seplat Energy Plc and Sahara Group put non-binding offers for Shell’s assets earlier this year, but the people said they no longer were in the running. The firms didn’t respond to requests for comment.
Famfa Oil, Troilus Investments Limited and Nigeria Delta Exploration and Production (NDEP), it was learnt, showed interests in the assets.
Shell Plc has stakes in 19 oil mining leases in Nigeria’s onshore oil and gas joint venture through the SPDC.
While Shell is retaining its deepwater oil assets and its large liquefied natural-gas presence, it’s not the only energy giant turning its back on Nigerian onshore and shallow water fields.
ExxonMobil Corporate agreed in February to sell its shallow-water unit to Seplat Energy for about $1.3 billion but the deal is being kept on hold for regulatory issues, and France’s TotalEnergies SE wants to offload its 10 per cent interest in the same joint venture Shell is divesting from.
