Shell Nigeria oil field sale draws bids from four local firms
Shell's sale of a multibillion dollar stake in a joint venture that operates oil fields in Nigeria has attracted bids from four local companies, according to people familiar with the negotiations.
Seplat Energy Plc, Sahara Group, Heirs Oil and Gas and ND Western submitted the non-binding offers in January, said the people, who asked not to be identified because the discussions are not public.
Shell’s 30% operating interest could fetch as much as $4-billion, according to one of the people. Another person said Shell has yet to disclose to buyers the scale of potential future costs related to litigation or decommissioning and abandoning oil wells, which could bring down the sale price significantly.
In August, energy consultant Wood Mackenzie valued the stake at $2.3-billion, assuming a long-term oil price of $50 a barrel. Brent crude, the international benchmark, is currently trading just below $90.
LONG HISTORY
Shell is looking to complete an exit process started in Nigeria more than a decade ago, by selling its remaining onshore and shallow-water assets. The London-based oil major has been pumping crude in the West African country since shortly before it secured independence in 1960.
That lengthy association has resulted in an accumulation of accusations, lawsuits and reputational damage as numerous local communities have been afflicted by oil spills and other forms of pollution. Investors are also keen for Shell to transition to cleaner forms of energy.
Even after a sale of the assets, Shell would retain a significant presence in Africa’s biggest crude producer as the owner of export terminals and deep-water projects.
Shell is currently evaluating the non-binding bids to see which parties to take to the next round, one of the people said. While deliberations are ongoing, no final agreements have been reached and Shell could also decide to retain the asset, the people said.
Shell, Seplat, Sahara and ND Western declined to comment when contacted by Bloomberg News. Heirs didn’t immediately respond to a request for comment.
State-owned Nigerian National Petroleum Co., TotalEnergies SE and Eni SpA own the rest of the joint venture, with 55%, 10% and 5% stakes, respectively. TotalEnergies declined to comment, while NNPC and Eni didn’t respond to questions.
Seplat is Nigeria’s biggest independent exploration and production company. The company said in November that it is also in “competitive discussions” to acquire ExxonMobil Corp.’s Nigerian shallow-water business.
ND Western and Heirs Oil and Gas both entered the oil sector by buying blocks from the trio of European majors that operate in the country, the former in 2012 and the latter last year. Sahara is a large Lagos-based energy conglomerate with stakes in two producing fields in Nigeria, but better known for owning power plants and oil trading.
Comments
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation