Climate change rains on efforts to raise finance
Many local companies who expressed interest to acquire some marginal fields in last year’s bid round were unable to raise the signature bonus ranging from $5 million to $20 million forcing some to be merged or to drop out entirely. Against this backdrop, local companies seeking to buy Shell’s assets valued at $3 billion face a bigger challenge.
Climate change concern is drawing away critical investment dollars from the energy sector. Some of the world’s biggest financiers, pension funds, philanthropies have said they would no longer fund fossil fuel projects. Major banks and multilateral organisations are facing pressure to discontinue funding oil and gas projects.
In this environment, local oil companies seeking to raise financing to acquire Shell’s assets would face a serious challenge. Sources close to the negotiation say financing and the ability to sustainably explore without ruining the environment are Shell’s top concerns.
This is why the proposal by the European Union to label natural gas as a ‘green energy’ source could boost the divestment deals.
Nigeria along with other gas producers has been campaigning for the inclusion of gas as a clean energy source.
This proposal will pave the way for new European investments in natural gas in Africa and will therefore allow Europe to unlock billions of euros in finance and sustainable energy funds to support gas as a transitional energy source, a development that may yet rescue this deal.