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Tony Elumelu’s Heirs Oil moves to buy Shell 30% stake in JVC worth more than $2.3 bln

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Nigerian companies Heirs Oil and Gas Ltd, majorly owned by Tony Elumelu and ND Western Ltd are competing to buy Shell Plc 30 per cent interest in the joint venture onshore oil and gas fields in Nigeria, a Bloomberg report has said.

The two firms are expected to submit their bids to Shell on Friday, June 10, the people said, the news agency quoting people familiar with the information.

Energy consultant Wood Mackenzie Ltd. last year valued Shell’s stake at $2.3 billion, assuming a long-term oil price of $50 a barrel. But with Brent now trading at about $121, the stake is likely worth significantly more. Shell, Heirs and ND Western declined to comment, the report said.

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.

Chief Executive Officer Ben van Beurden 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.

READ ALSO: Nigeria’s electricity distributors growing revenue base

A number of Nigerians believe that Shell especially is leaving the region in a “mess” after the devastation of the environment for over 60 years and has no plan for cleaning it up or embarking on decommissioning and is now moving towards the deep offshore terrain.

According to a recent McKenzie document,  19 Oil Mining Leases (OMLs) are expected to be put up for sale by the oil giant in onshore locations and shallow waters in the company’s eastern and western operations in the Niger Delta.

Nigeria’s crude production has fallen 25 per cent in the last decade Data compiled by Bloomberg with potential future costs related to litigation and environmental liabilities likely to affect the stake’s valuation, two of the people said.

Two other local companies,  Seplat Energy Plc and Sahara Group Ltd., Bloomberg said,  put non-binding offers for Shell’s assets earlier this year, but the people said they no longer were in the running. The firms didn’t respond to requests for comment.

While Shell is retaining its deepwater oil assets and its large liquefied natural-gas presence, it’s not the only energy giant turning its back on 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 France’s TotalEnergies SE wants to offload its 10 per cent interest in the same joint venture Shell is divesting from.

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