June 09, (THEWILL) – Shell Plc expects to receive two final bids for its stake in its Nigerian joint venture this week.
Bloomberg reports that the bids are from Tony Elumelu’s Heirs Holdings and a local firm ND Western Limited – citing people close to the heart of the matter.
The two are scrambling to procure Shell’s three-tenths holding in the JV located in the crude-rich Niger Delta region and offshore fields neighbouring it.
Shell will stop welcoming bids on Friday, June 10, Bloomberg said, quoting the people who spoke on the condition that their identities will be concealed, given the sensitivity of the subject.
In 2021, oil and gas consultancy research house WoodMac estimated Shell’s own slice of the partnership at $2.3 billion based on a long-term oil price of $50 per barrel.
But as Brent now hovers around $121, the value of Shell’s interest is likely to be way higher.
Last year, the oil major said it was willing to divest its interest while noting 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.
Ben van Beurden, Shell’s chief, informed shareholders last month that a steep surge in attacks had sparked off a near-chaos situation that its firm could not handle.
“In the end, we have to concede that this is beyond what we can do,” Mr Beurden said.
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.
Bloomberg reports that Exxon Mobil Corp is also walking that path having announced in February it planned to offload its shallow-water operations to Seplat for around $1.3 billion.
TotalEnergies is also on track to divest its 10 per cent holding in the same JV involving Shell.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
