BusinessDay

Seplat, Sahara Energy, Niger Delta, Famfa line up to acquire Shell’s $3bn assets

At least five Nigerian oil and gas companies are preparing to submit bids this month for Royal Dutch Shell’s onshore oilfields in a sale that could fetch up to $3 billion, three sources involved in the process told Reuters.

Shell started talks with the Nigerian government last year about selling its stake in the West African country’s onshore fields, where it has been active since the 1930s, as part of a global drive to reduce its carbon emissions.

The Anglo-Dutch company has stakes in 19 oil mining leases in Nigeria’s onshore oil and gas joint venture (SPDC), which the industry and banking sources said were valued at $2 billion to $3 billion.

Shell operates SPDC (Shell Petroleum Development Company of Nigeria) and holds a 30% stake in the venture. The state’s Nigerian National Petroleum Corporation (NNPC) holds 55%, TotalEnergies has 10% and ENI 5%.

Shell has also struggled for years with spills in the Niger Delta due to pipeline theft and sabotage as well as operational issues, leading to costly repairs and high-profile lawsuits.

The sale has drawn interest from independent Nigerian oil and gas firms including Seplat Energy, Sahara Group, Famfa Oil, Troilus Investments Limited and Nigeria Delta Exploration and Production (NDEP), the sources said.

Read also: How oil-dependence truncated Nigeria’s industrial development

No international oil companies were expected to take part in the bidding process at this point, the sources said, adding that bids were due by Jan. 31.

A Shell spokesman declined to comment. Sahara Group said it did not comment on market speculation. Seplat, Famfa, Troilus and NDEP did not immediately respond to requests for comment.

State-controlled NNPC could also choose to exercise its right to pre-empt any sale to a third company, the sources said.

They said it was unclear whether potential bidders could raise sufficient funds as many international banks and investors have become wary about oil and gas assets in Nigeria due to concerns about environmental issues and corruption.

There is a significant reduction in the financing of fossil assets around the world although some African and Asian banks, however, are still willing to finance fossil fuel operations in the region, they said.

Troilus has hired Nigeria-focused Africa Bridge Capital Management to raise up to $3 billion for the assets, according to sources and documents seen by Reuters. Africa Bridge Capital declined to comment.

Any buyer of Shell’s assets will also need to show it can deal with future damage to the oil infrastructure which has ravaged Nigeria’s Delta in recent years, the sources said.

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