Heirs Oil, ND Western to submit bids for Shell’s onshore divestment programme

Shell Plc is set to receive two final offers this week for its onshore oil and gas fields in Nigeria by some indigenous companies who are angling to acquire assets the company is set to divest.

Local firms Heirs Oil and Gas Ltd. and ND Western Ltd. are vying for Shell’s 30 percent stake in the joint venture, which operates assets in the Niger Delta and nearby offshore areas according to a Bloomberg report.

Bids are due on June 10, according to the people, who asked not to be identified because the information is private.

Shell’s stake was valued at $2.3 billion by energy consultant Wood Mackenzie Ltd. last year, assuming a long-term oil price of $50 per barrel. However, with Brent trading at around $121, the stake is likely worth much more.

Bloomberg said: “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.

Read also: Elumelu’s Heirs Holding, ND Western target Shell’s $2.3bn oil assets in Niger Delta

Ben van Beurden, Chief Executive Officer, Shell Plc, 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.

Nigerian troubles

Two of the people said that potential future costs related to litigation and environmental liabilities would most likely affect the stake’s valuation.

Two other local firms, Seplat Energy Plc and Sahara Group Ltd., made nonbinding offers for Shell’s assets earlier this year, but the people said they were no longer in the running. Requests for comment were not returned by the companies.

While Shell retains its deepwater oil assets and significant liquefied natural gas presence, it is not the only energy behemoth abandoning 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 TotalEnergies SE of France wants to sell its 10 percent stake in the same joint venture that Shell is exiting.