January 07, (THEWILL) – At least five indegenenous oil and gas companies have indicated interest to submit bids as Royal Dutch Shell Plc (Shell) plans to sell more of its Nigerian onshore assets.
According to a report by Reuters, the firms said to be eyeing the assets believed to be worth about $3 billion are Seplat Energy, Sahara Group, Famfa Oil, Troilus Investments Limited, and Niger Delta Exploration and Production Plc.
But sources in the industry have also expressed concerns over the ability of potential bidders to raise necessary funds to close the deal. This is because of the apathy of several international financial institutions and investors towards financing oil and gas assets in Nigeria.
According to Reuters, one of the firms positioning to take over the assets, Troilus, has hired Africa Bridge Capital Management – a company with interest in Nigerian investments to raise $3 billion for the assets.
Last August, the government announced plans to develop a comprehensive divestment policy to protect the oil industry’s dearth of technical, financial, and operational capabilities.
With majority stakes in the assets, Nigerian National Petroleum Corporation (NNPC) could also choose to exercise its right to pre-empt any sale to a third company, Reuters reported.
The NNPCL had hinted at plans to reject the arbitrary takeover of operatorship of oil assets divested by International Oil Companies (IOC) in the country to protect strategic national interest.
“We have engaged all our partners to ensure that while they have the right of divestments, that there should be no situation where this will become a waterloo of our industry. Therefore, NNPC will ensure Nigeria’s strategic national interest is safeguarded by developing a comprehensive divestment policy that will provide clear guidelines and criteria for divestment of partner’s interest”, Mele Kyari, group managing director of NNPC had said earlier in a statement
Shell Petroleum Development Company of Nigeria (SPDC) is a subsidiary of Shell In Nigeria. SPDC is the operator of a joint venture between the Nigerian National Petroleum Corporation (55%), SPDC (30%), Total E&P Nigeria Limited (10%) and Nigerian Agip Oil Company Limited (5%).
The Anglo-Dutch company has stakes in 19 oil mining leases in Nigeria’s onshore oil and gas joint venture through (SPDC).
For over a decade, the company has been selling its onshore assets to focus on offshore.
In 2021, Shell announced that it started talks with the federal government to sell its onshore oil assets in Nigeria.
The firm has had issues with spills in the Niger Delta which have often been linked to pipeline vandalism, oil theft, and sabotage as well as operational issues with enormous repair costs and high-profile lawsuits.
Ben van Beurden, chief executive officer of Shell, said: “We cannot solve community problems in the Niger Delta; that’s for the Nigerian government perhaps to solve. We can do our best, but at some point in time, we also have to conclude that this is an exposure that doesn’t fit with our risk appetite anymore.”