Shell set to receive final offers for 30% stake in Nigeria oil, gas fields

Dinesh Nair, William Clowes and Laura Hurst June 10, 2022

(Bloomberg) — Shell Plc is set to receive two final offers this week for its onshore oil and gas fields in Nigeria, according to people with knowledge of the matter.

Local companies Heirs Oil and Gas Ltd., and ND Western Ltd. are competing to buy Shell’s 30% interest in the joint venture, which operates assets in the Niger Delta and nearby offshore areas. Bids are due June 10, the people said, asking not to be identified because the information is private.

Energy consultant Wood Mackenzie Ltd. 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, the stake likely is worth significantly more.

Shell, Heirs and ND Western 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. CEO 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 Ltd. — 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.

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.

Exxon Mobil Corp. agreed in February to sell its shallow-water unit to Seplat for about $1.3 billion, and France’s TotalEnergies SE wants to offload its 10% interest in the same joint venture Shell is divesting from.

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