Heirs Holdings, ND Western stand out as Shell closes bid on JV stake
Two indigenous oil companies are expected to proceed with efforts to buy up the 45 percent stake in the oil and gas assets operated by Shell under a joint venture agreement with government and two other companies.
The Oracle Today quotes Bloomberg as reporting indigenous investment company, the Heirs Holdings and indigenous independent operator, ND Western Limited, may form the preferred bidders who would now proceed with the divesting Shell towards next level of considerations.
Shell was scheduled to stop welcoming bids on June 10, Bloomberg quoted inside sources.
In previous divestment of JV assets, Shell had sold the collective stake of the three European energy multinational companies joined in the partnership: Shell, TotalEnrgies and Eni. It is thus likely that the bidders in the biggest divestment by the companies would also take the cumulative 45 percent stake held by the three firms.
Operatorship of the assets is likely to be determined by the Nigerian National Petroleum Company (NNPC) Limited which holds 55 percent overriding stake in the joint venture.
The Oracle Today reports that most European multinational oil companies that form traditional joint venture partners to NNPC are in the process of aligning with the European Union to divert energy budgets from fossil development to greener renewable energy options. The 27 nation European Union along with the United Kingdom have set target phase out use of fossil fuels in transportation by 2035.
Consequently, European energy giants are repositioning their businesses to emphasize cleaner energy options while retaining petroleum portfolios for generating investment funds.
Shell had declared that its JV operations in Nigeria have lost the company’s appeal for further investments, but it still drives deepwater production operations. The three partners are also bullish with gas processing investments in the country.
Shell had earlier declared that its long-term energy transition blueprint is out of tune with the operating environment in Nigeria, where oil installations and pipelines are the target of vandals and where crude spills and theft are rife.
With the divestment, Shell is targeting to recover princely $2.3 billion, according to 2021 valuation of the assets by Wood Mackenzie. The estimate was based on a long-term oil price of $50 per barrel. At a moderate estimate of $100 per barrel the expected divestment yield would double to $4.6 billion.
Citing the opinions of people privy to the transaction, Bloomberg predicts that possible future costs linked to litigation and environmental liabilities could influence the valuation of Shell’s stake.
Seplat Energy and Sahara Group, who last February launched non-binding bids for the stake are no longer in contention, Bloomberg said in the statement, quoting sources close to the matter.
