Nigerian Firms to Buy $3bn Oil Stakes in Shell Nigeria

The Royal Dutch Shell Company has revealed that five Nigerian oil and gas firms are preparing to submit bids for the company’s onshore oilfields.

The sale could generate up to $3 billion in revenue, sources working with Shell told Reuters.

Recall that the Anglo-Dutch company which owns stakes in 19 oil mining leases in Nigeria’s onshore oil and gas joint venture informed the federal government of plans to sell its stakes.

The company controls a 30% stake in the Shell Petroleum Development Company of Nigeria (SPDC). This is 25% lesser than the Nigerian National Petroleum Corporation (NNPC), which holds 55%. TotalEnergies (TTEF.PA) has 10% and ENI 5%.

The oil and gas industry, including banking sources, have said that Shell’s assets in the last quarter of 2021 were valued at $2 billion to $3 billion.

However, Shell has made it clear it is selling off its stakes as part of its drive to reduce carbon emissions.

The company 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.

According to the sources speaking to Reuters, the stock sale has drawn interest from independent Nigerian oil and gas firms including Seplat Energy (SEPLAT.LG), Sahara Group, Famfa Oil, Troilus Investments Limited and Nigeria Delta Exploration and Production (NDEP).

No international oil companies, however, were expected to take part in the bidding process at this point. They may however be allowed to bid before the close of the process by Jan. 31, the sources noted.

The reality is that it remains unclear if 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.

Some African and Asian banks, however, were still willing to finance fossil fuel operations in the region, they said.

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

Another possibility is that NNPC, as the majority stakeholder holding 55% of SPDC shares, could also choose to exercise its right to pre-empt any sale to a third company.