By YANGE IKYAA
As part of its current drive to phase down carbon emissions from petroleum exploitation activities, international oil major, Shell, is placing more oil assets in Nigeria on sale, with at least five Nigerian oil and gas companies said to be preparing bid submission this month for its onshore oilfields.
The deal is estimated to fetch up to $3 billion, three sources involved in the process told Reuters.
Shell started discussion with the Nigerian federal government last year about selling its stakes in its onshore fields in the country, where it has been active since the 1930s, as part of a global drive to reduce its carbon emissions.
The Anglo-Dutch company has stakes in 19 oil mining leases in Nigeria’s onshore oil and gas joint venture, SPDC, which industry and banking sources said were valued at around $2 billion to $3 billion.
Shell operates SPDC, an acronym for Shell Petroleum Development Company, and holds a 30% stake in the venture. The state’s Nigerian National Petroleum Company (NNPC) holds 55 per cent, while TotalEnergies and Eni have 10% and 5% respectively.
The company has also struggled for years with spills in the Niger Delta region of Nigeria due to pipeline theft and sabotage, as well as operational issues, such as aging infrastructure, leading to costly repairs and high-profile lawsuits.
The current placement of its assets on sale has drawn interest from independent Nigerian oil and gas firms, including Seplat Energy, Sahara Group, Famfa Oil, Troilus Investments Limited and Niger Delta Exploration and Production (NDEP) company, according to sources familiar with the transaction process.
No international oil companies were expected to take part in the bidding process at this point, the sources said, adding that bids were due by January 31. A Shell spokesman declined to comment on the matter.
Sahara Group said it does not comment on market speculation, while Seplat, Famfa, Troilus and NDEP did not immediately respond to requests for comments.
It has been claimed by industry experts that state-controlled NNPC could choose to exercise its right to pre-empt any sale to a third company.
They also said it was unclear whether potential bidders could raise sufficient funds, as many international banks and investors have become wary of oil and gas assets in Nigeria due to concerns about environmental issues, corruption and insecurity.
Some African and Asian banks, however, were still willing to finance fossil fuel operations in the region, they said.
Troilus has hired Nigeria-focused Africa Bridge Capital Management to raise up to $3 billion for the assets, according to Reuters, citing transactional documents it saw. Africa Bridge Capital declined to comment.
Any buyer of Shell’s assets will also need to show it can deal with future damage to the oil infrastructure, which has ravaged Nigeria’s Niger Delta in recent years.