Oil giant, Shell is preparing to receive two final offers for its onshore oil and gas fields in Nigeria this week from local companies.
Heirs Oil and Gas and ND Western are competing for Shell’s 30 per cent stake in onshore consortium SPDC, whose other members are owned by the Nigerian National Petroleum Company(NNPC) Limited with 55 per cent, TotalEnergies with 10 per cent and Italy’s Eni with 5 per cent.
Shell CEO, Ben van Beurden, revealed that, the oil major was in talks with the Nigerian government on the sale in May last year.
Explaining the sale, van Beurden said, keeping hold of its Nigerian business, which has struggled for years with spills caused by pipeline sabotage and oil theft, resulting in costly repair work, was incompatible with its energy transition strategy.
In a report last year, energy consultant, Wood Mackenzie, estimated the value of Shell’s interest in SPDC at $2.3bn, but that was assuming a $50/barrel oil price over the long term. Brent is currently trading at over $120/b, suggesting that, the stake could fetch more.
WoodMac 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.